The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate remains trending in a narrow range as investors and analysts wait for this week’s vital UK budget and Bank of England (BoE) announcements.
Pound (GBP) Unable to Maintain Growth against Australian Dollar (AUD) Amid ‘Brexit’ Concerns
This week has the potential to see the first ‘Brexit’-related central bank decision and investors remain wary of the Pound (GBP) as they anticipate upcoming key announcements for the British economy. The GBP/AUD exchange rate is currently holding steady, trending in the region of 1.8988.
The Pound still appears to be struggling following its long period of politically-driven weakness. This week, the BoE is due to make its key rate decisions and Chancellor of the Exchequer George Osborne will be making his budget speech to Parliament.
Sterling remains weak in anticipation of these vital March events, however the Australian Dollar fairs little better after decreased risk-sentiment left investors hesitant to move too quickly on the ‘Aussie’.
The Pound was able to gain around a third of a cent over its oceanic rival during the London session yesterday before dropping back down, showing how temperamental the Australian Dollar can be.
Oil Prices and Reserve Bank of Australia (RBA) Minutes Diminish Australian Dollar (AUD) Confidence
Despite a weak Pound, the ‘Aussie’ was not able to advance on its embattled British rival. The oil crisis in the global economy hit another obstacle yesterday as Iran’s Oil Minister Bijan Zanganeh announced he would not move from his stance to ramp up oil production to 4 million barrels a day.
This comes on the heels of hopes that a decision would be made to decrease oil production and raise oil prices. However, most major oil producing countries could not agree to curb production until all other nations in the commodity bloc had agreed to do the same.
Oil prices began dropping once more, considerably weakening risk-sentiment in the foreign exchange market. While Australia’s primary export is not oil, the Australian Dollar still suffered from this movement as the currency is seen as high-risk and struggles under low-risk market mentalities.
Adding to the ‘Aussie’s’ weakness, the Reserve Bank of Australia (RBA) has released minutes for its March meeting this morning, drudging up the memory of the central bank leaving interest rates on hold at 2%. The RBA commented that following the Bank of Japan’s (BoJ) rate cut in January, other central banks had also taken negative outlooks and uncertainty had risen in the global economy.
Other information from the RBA appears positive, however, as the central bank imagines an optimistic exportation future between Australia and its trade-partner China. Housing market conditions in Australia have also eased and stabilised, a result the RBA had been anticipating for some time.
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast: Central Bank Announcements to Decorate the Week
Any weak movements in the Australian Dollar and, more especially, the Pound are predicted to be a thing of the near past by the end of the week as the middle of March is set to be littered with key bank announcements and speeches from the UK and Australia.
The Bank of England (BoE) is due to make its latest interest rate decision and announce its asset purchase target this coming Thursday.
While the bank is currently expected to keep the interest rate at a steady 0.50%, many analysts expect that comments will be made about the likeliness of future cuts or hikes. Especially interesting to some investors is the possibility that the central bank may discuss what measures could be taken in the event of a ‘Brexit’ in June.
George Osborne’s budget is also due to be discussed on Wednesday and traders fear that spending may be reined in to lower the currently high deficit. This would imply lowered British growth was expected.
Also due on Wednesday is a collection of other important UK data, including the unemployment rate for the 3 months through January and other employment-related releases. Suffice to say, stronger or weaker than expected results are certain to influence the weak Pound.
Some important events are due for Australia too, which are likely to inspire some movement in the Australian Dollar. Westpac bank is due to release its leading index data for February late tonight and there will be speeches from Reserve Bank of Australia (RBA) executives tomorrow and Thursday.
Lastly, Thursday morning will see the release of highly anticipated Australian unemployment rate and other employment data, which is forecast to be positive. If optimistic estimates are followed through with good data, it’s possible the ‘Aussie’ could recover a little– especially if this week’s UK announcements do not strengthen the Pound.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 1.8988 while the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate trends in the region of 0.5264.
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