GBP/AUD Exchange Rate Buoyed Ahead of Johnson’s Cabinet Decision
The Pound Australian Dollar (GBP/AUD) exchange rate is edging higher today, with the pairing accelerating ahead of the
announcement of who will fill some key positions within Boris Johnson’s new cabinet.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.7837, up roughly 0.3% so far this morning and propelling the pairing to a fresh one-week high.
Pound (GBP) Expected to Fluctuate as Johnson to Appoint a New Cabinet
The Pound (GBP) looks likely to be met by volatility today as Theresa May officially steps and Boris Johnson officially become Prime Minister.
While his first speech in front of 10 Downing Street will be closely scrutinised by GBP investors for any hints on his policy plans, it will likely be his cabinet appointments that will likely be the greatest catalyst for movement in Sterling today.
Out of these appointments, the key focus will be on who will become the new Chancellor of the Exchequer, with GBP investors likely to be wary of a Brexit supporting Chancellor who may help facilitate a no-deal Brexit.
Australian Dollar (AUD) Slips, Will the RBA Accelerate its Next Rate Cut?
Meanwhile, the Australian Dollar (AUD) weakened overnight on Tuesday, amidst speculation over the timing of the Reserve Bank of Australia’s (RBA) next rate cut.
Analysts at one of Australia’s largest banks, Westpac, forecast that the RBA is likely to bring forward the next rate cut from November to October as unemployment continues to deviate from the RBA’s targets.
‘By October, we expect that the path of the unemployment rate will be sufficiently contrary to the RBA’s plans that they will have appropriate justification to ease policy a little earlier than we had previously expected.’
Unsurprisingly expectations of an earlier cut is not supportive of the Australian Dollar and leaves the currency open to further losses this week.
GBP/AUD Exchange Rate Forecast: UK Politics to Remain in Focus
Expect to see UK political developments remain the main catalyst for movement in the Pound Australian Dollar (GBP/AUD) exchange rate for the remainder of the week, with Boris Johnson’s statement to parliament on Thursday also likely to be closely watched by markets.
For AUD investors the focus in the second half of the week will remain on the RBA following a speech by the bank’s Governor, Philip Lowe early on Thursday.
This could drive further losses in the Australian Dollar if we see Lowe appear to hint that the RBA may be accelerating its easing timetable in response to deteriorating economic conditions.