Pound to Australian Dollar Exchange Rate Hits Weekly Worst after Tumbling
In the middle of the week, the Pound to Australian Dollar (GBP/AUD) exchange rate’s rebound from its lowest levels was interrupted by a more dovish than expected tone from Federal Reserve officials. The Australian Dollar (AUD) has been climbing since then.
After opening this week at the level of 1.7950, GBP/AUD spent the first half of the week climbing and touched on a high of 1.8031 on Wednesday.
Since then GBP/AUD has been tumbling again though, and touched on its worst levels since last week at the time of writing today.
GBP/AUD is currently trending near the level of 1.7900, which puts it less than half a cent above last week’s post-January worst level of 1.7867.
As the Federal Reserve was more dovish this week than expected and the Reserve Bank of Australia (RBA) is not expected to be too quick to act again on monetary policy, the Australian Dollar has been benefitting from monetary policy divergence.
Pound (GBP) Exchange Rates Lack Support despite Bank of England (BoE) News
Another week, another set of sessions in which no-deal Brexit fears dominated the Pound (GBP) outlook and keep the British currency’s potential for gains heavily limited.
Some investors opted to buy the Pound back from its worst levels in profit-taking this week, and Sterling also found a little support in yesterday’s Bank of England (BoE) news.
The Bank of England published its financial stability report, and said it believed that Britain’s banks and financial system were resilient enough to survive both a no-deal Brexit and a global trade war.
However, while this news offered the Pound a little fresh support, BoE Governor Mark Carney did reassert that these events would still notably damage Britain’s economy, and urged politicians to avoid them.
The news ultimately wasn’t enough to help the Pound to avoid late-week losses against a stronger Australian Dollar either.
Australian Dollar (AUD) Exchange Rates Climb despite Lack of Domestic Support
Despite mixed Australian data and speculation of further dovishness for the Reserve Bank of Australia (RBA), the Australian Dollar has seen solid gains in recent sessions.
Since Wednesday’s comments from Federal Reserve Chairman Jerome Powell, investors have been buying the trade-correlated Australian Dollar again due to perceived Central Bank policy diversion and weakness in the US Dollar (USD).
The Federal Reserve was more dovish than expected in this week’s comments, causing Fed interest rate cut bets to rise and the US Dollar (USD) to fall.
Meanwhile, the RBA has recently indicated that further monetary policy easing is unlikely to have much impact. This has implied to investors that the bank does not plan to loosen policy much further.
As a result of the Fed’s dovishness and the RBA’s comparative neutral stance, the Australian Dollar advanced despite this week’s Australian confidence and home loans data being generally disappointing as well.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Outlook Depends on RBA Speculation
Next week could be an even more influential one for the Pound to Australian Dollar (GBP/AUD) exchange rate, as events throughout the week could notably influence movement in both currencies.
Highly influential data from both Britain and Australia will be published, with UK job market stats, inflation figures and retail sales, as well as Australia’s own key job market data.
While these figures could be influential however, other news throughout the week may be even more vital to the outlook of both currencies.
Tuesday’s Asian session will see the Reserve Bank of Australia (RBA) publish its latest meeting minutes report.
RBA interest rate cut bets are mixed as the bank has signalled that further easing may not make enough difference to be worthwhile. As a result, the details of the bank’s view on policy could further influence market bets.
Next week also marks the final full week of Britain’s Conservative Party leadership contest, so surprising UK political developments could be particularly influential for the Pound to Australian Dollar (GBP/AUD) exchange rate outlook.