GBP/AUD Exchange Rate Falls on BoE Rate Decision Split
The Pound Australian Dollar (GBP/AUD) exchange rate fell by -0.6% today, after the Bank of England (BoE) held its interest rate at 0.75% amid a split in which two members of the bank’s key policy body voted to downgrade the rate due to Brexit uncertainty and ongoing global trade disputes.
The BoE also cut its growth forecasts, saying in its latest Monetary Policy Report:
‘Growth in the UK economy has been volatile this year in part because of Brexit preparations. We expect growth this year to be roughly half that in 2018.’
‘Lower growth elsewhere has reduced the demand for the goods and services that the UK sells abroad.’
Sterling fell against the Australian Dollar (AUD) due to the now increasing likelihood of BoE interest rate cut in 2020 after today’s split vote.
British political news has continued to dominate headlines today, but with any further signs of the Tories cementing their lead in the polls we could see the Pound rise on a returning sense of political stability.
AUD/GBP Exchange Rate Rises, Australian Exports Balloon in September
The Australian Dollar (AUD) rose against the Pound (GBP) following today’s release of September’s Australian trade balance figure, which beat forecasts and rose from 5,926 million to 7,180 million.
Australia’s exports also ballooned to a record high, shipping out a 43,2 billion worth of services and goods in September. As a result, the ‘Aussie’ has benefited from renewed hopes in the Australian economy.
Gareth Aird, a Senior Economist at CBA, was upbeat, saying:
‘Most analysts can rattle off a list of things to be uneasy about — US-China trade policy; Brexit; populism; idiosyncratic issues in western Europe and the slowdown in the Chinese economy — but these angsts are not being reflected in our trade balance… Australia’s external sector is presently riding the wave of higher export volumes, buoyant commodity prices and an Aussie dollar hovering in the 67-69 US cent range.’
With China being Australia’s largest economy, reports of progressing US-China trade talks has provided some uplift for the ‘Aussie’ today.
GBP/AUD Outlook: Could the ‘Aussie’ Rise on Hawkish RBA Monetary Policy?
Australian Dollar traders will be looking ahead to the Reserve Bank of Australia’s monetary policy statement tomorrow. Any signs of bullishness from central bank could further boost the ‘Aussie’ on renewed hopes of recovery for Australia’s economy.
Tomorrow will also see the release of Australia’s home loans figure for September, which is expected to increase by 1.3%.
With no UK economic data due out until next week, British political developments will continue to drive the Pound into the weekend.
Any signs of uncertainty surrounding the Tory’s position ahead of the 12th December general election could weaken Sterling on heightened political uncertainties.