GBP to AUD Exchange Rate Soft on ECB Rate Revision
If you're looking to make an international money transfer, we recommend TorFX.
Australia has witnessed a highly influential Tuesday thus far with the publication of the interest rate decision alongside the Performance of Service Index and Trade Balance figures.
The Australian Performance of Service Index attained 49.3 in July, hovering a shade below the 50 threshold that indicates productivity. July’s figure betters June’s 47.6, suggesting that the Australian services sector is gaining momentum.
The Reserve Bank of Australia (RBA) Interest Rate Decision however is the most influential figure published as Governor for the RBA Glenn Stevens has commented on his views for the Australian economy. For now, the RBA have maintained their current 2.50% interest rates.
Interest rates are hot topic in the currency market as indicators of how strong an economy is performing. If the central bank decides to hike interest rates, this indication would suggest the economic climate is stable enough to advance.
Stevens stated: ‘On present indications, the most prudent course is likely to be a period of stability in interest rates.
There has been some improvement in indicators for the labour market this year, but it will probably be some time yet before unemployment declines consistently.’
However, some believe that a rise in interest rates will occur in 2015, as the 2014 climate is unable to feasibly sustain them.
Economist for the Commonwealth Bank Michael Blythe commented: ‘We’ve had 12 months without a change in interest rates so that period of stability is already quite lengthy. In our forecasts we have them starting to nudge interest rates up from February next year.’
Australia’s Trade Balance figures also surprised, showing a smaller than expected deficit of only -1683M, in comparison to the forecast -2000M.
Some economists have stated that the stubbornly high ‘Aussie’ which frequently trades in and around the 93/94 US cents region of late, was failing to help the trade balance figures.
Economist expert Su-Lin Ong suggests: ‘That’s part of the Reserve Bank of Australia’s rhetoric that the currency remains elevated despite movements in commodity prices and that’s what’s driving the deficits at this point in time.’
Conversely the Pound is trading amid speculation regarding Thursday’s interest rate meeting by the Bank of England (BoE).
The BoE has been shrouded in ambiguity over recent months regarding rate hikes; however, economists are calling for clarity from the bank after some suggested it’s behaved like an ‘unreliable boyfriend.’
Economist Simon Kirby stated: ‘One thing that will happen as we converge on that policy turning point is if communication is not clear we will see volatility. On past performance there’s potential for some lack of clarity… it’s up to the MPC to be clear as they can be and clearer than they’ve been over the last six months.’
GBP to AUD Forecast
At present the AUD to GBP exchange rate is trading at 0.5538, however; the currency pairing will be influenced by Thursday’s BoE policy meeting, which could cause the Pound to rally against other majors if some policy members step away from the previously unanimous vote to maintain low interest rates.
The Pound Sterling to Euro Exchange Rate is currently trending in the region of 1.2580.
In the aftermath of the decision by the European Central Bank to cut its benchmark rate by 10 basis points has seen the ‘Aussie’ (AUD) make huge gains versus the majority of its major competitors.
‘Aussie’ strength has also been helped by a string of positive economic data publications and Friday’s solitary data release has extended the upbeat run. The AiG Performance of Construction Index rose to 55 in August having registered a score of 52.6 previously.
Friday’s British domestic data publication has been less desirable for those invested in the Pound. The Bank of England Inflation estimate for the next 12 months has seen an increase from 2.6% to 2.8%. Given that the BoE inflation target is at 2% the increase will be an unwelcome one, especially if future labour market data fails to correlate.