GBP/AUD Exchange Rate Edges Higher as RBA’s Rate Cut Comments Haunt Australian Markets
The Pound Australian Dollar (GBP/AUD) exchange rate edged higher today and is currently trading around AU$1.8466 on the inter-bank market.
The Australian Dollar (AUD) fell against the Pound (GBP) following a speech by Philip Low, the Governor of the Reserve Bank of Australia (RBA), in which he stated the RBA may ‘consider the case for lower interest rates’ as early as the beginning of June.
David Plank, an Economist at ANZ, said:
‘The RBA governor was upfront about the decision facing the Board in June. This is as clear a signal as the RBA ever delivers. We think the RBA will cut in June.’
With the Australian economy so closely-tied to China’s, the ongoing US-China trade tensions are leaving many ‘Aussie’ traders feeling jittery.
Curtis Chin, an Asia Fellow of the think tank, Milken Institute, commented:
‘It’s going to get worse before it gets better.’
GBP/AUD Exchange Rate Rises despite Brexit ‘Hijack’ Fears
The Pound, meanwhile, edged higher against the ‘Aussie’ despite renewed Brexit uncertainty, with the Chancellor Philip Hammond warning that a group of Brexiteer MPs are attempting to ‘hijack’ the referendum result.
Hammond is due to say in an upcoming speech:
‘If we do not resolve this issue in the next few weeks, there is a real risk of a new Prime Minister abandoning the search for a deal, and shifting towards seeking a damaging no-deal exit as a matter of policy… in order to protect an ideological position which ignores the reality of Britain’s economic interests and the value of our Union.’
Theresa May’s leadership is also coming under increasing strain as the contest intensifies ahead of May’s uncertain future after the decisive June vote on the withdrawal agreement.
Esther McVey, the Pensions Secretary, is now vying for the leadership role, establishing the Blue Collar Conservatism Group in a new pitch.
With no influential UK economic data today, the Pound has been mainly driven by political developments.
GBP/AUD Outlook: Brexit Developments to Remain in Spotlight
Pound traders will be looking ahead to the publication of the UK retail price index figures for April tomorrow, which are expected to improve.
These will be followed by the UK year-on-year CPI figures for April, which are also expected to rise, potentially buoying the GBP/AUD exchange rate further.
‘Aussie’ traders, meanwhile, will be looking ahead to the Australian construction work done figures for the first quarter.
The GBP/AUD exchange rate will be driven by political developments this week, with any signs that Theresa May can gain necessary compromises on the customs union, and secure a parliamentary majority, ahead of June’s vote likely to prove Pound-positive.