Pound Australian Dollar Exchange Rate’s Movement is Narrow as ‘Aussie’ Strengthens
The Pound Australian Dollar (GBP/AUD) exchange rate’s outlook is becoming softer as market demand for the Australian Dollar (AUD) recovers. The latest Reserve Bank of Australia (RBA) meeting minutes saw no real shocks, adding to market calm.
Last week saw the Australian Dollar clawing back some ground, and GBP/AUD slipped slightly from the level of 1.7890 to 1.7853 throughout the week.
This week’s GBP/AUD movement has been a little more buoyant, but the Pound (GBP) is still struggling to sustain big gains despite its bullishness. At the time of writing, GBP/AUD is trending a little higher in the region of 1.7871.
Key UK and Australian data due later in the week is the next focus for the Pound to Australian Dollar exchange rate outlook.
Pound (GBP) Exchange Rates Remain Appealing on UK’s Coronavirus Recovery Hopes
Britain continues to vaccinate its population at a faster rate than other major economies. As a result, the Pound continues to benefit from speculation that Britain’s economy will recover before other major economies.
This has been the primary cause of the Pound’s appeal in recent weeks, and it continues to keep Sterling on the uptrend this week so far.
According to Ricardo Evangelista, Senior Analyst at ActivTrades, the coronavirus outlook is keeping the Pound outlook stronger than rivals:
‘However, the Pound is finding support amidst a global rise in investor confidence, that is proving positive for risk related assets, and because of the success of the British vaccine rollout, which has placed the country ahead of its peers and in pole position for the post-pandemic economic rebound.’
Australian Dollar (AUD) Exchange Rates Steady after No Surprises from the RBA
The Reserve Bank of Australia (RBA) published its latest meeting minutes report overnight. It follows the RBA’s latest policy decision, in which the bank surprised investors by unexpectedly expanding its quantitative easing (QE) scheme.
This led to Australian Dollar weakness earlier in the month, but the meeting minutes report contained no further surprises.
Instead, the bank explained its reasoning for expanding QE, but also indicated that negative interest rates were also extremely unlikely.
The bank said:
‘Members affirmed that the cash rate would be maintained at 10 basis points for as long as necessary. They continued to view a negative policy rate as extraordinarily unlikely’
Due to the lack of surprises, the Australian Dollar’s appeal strengthened slightly as investors felt a little more confident buying the currency.
Pound Australian Dollar (GBP/AUD) Exchange Rate Outlook to be Driven by Major Data
The Pound to Australian Dollar exchange rate’s movement is narrow this week so far, as both currencies strengthen.
However, there could be a bigger shift in demand later in the week depending on the publication of major upcoming UK and Australian ecostats.
Tomorrow’s UK inflation rate results may not be too influential, but Thursday’s Australian job market stats and Friday’s retail and PMI stats could cause big shifts in movement if they surprise investors.
Australia’s job market is a key indicator of Australian economic health. As a result, stronger than expected Australian job stats on Thursday could help the Australian Dollar to push GBP/AUD lower again.
Friday’s UK retail and PMI results could dampen Pound appeal if they fall short of expectations.
Of course, coronavirus and vaccine developments will continue to influence the Pound Australian Dollar (GBP/AUD) exchange rate outlook as well.