GBP AUD Gains as Pound Becomes Appealing Haven
GBP AUD has been able to make minor gains, despite RBA Governor Philip Lowe offering a positive outlook on the Australian economy.
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GBP AUD Gains as Investors Look for Safe Alternatives to USD and EUR
Pound Sterling has been able to hold minor gains against the Australian Dollar recently, despite an overall lack of domestic data.
The only report on offer was the Royal Institute of Chartered Surveyors (RICS) house balance, which surprised to the upside after clocking in at 25%. Forecasts were for a fall from 23% to 22%.
However, political concerns in the US and the Eurozone made the Pound a rather appealing buy for investors looking for a relatively safe asset.
Because markets have had plenty of time to come to terms with the fact the UK is heading for a ‘hard Brexit’, the largest downside risks for Sterling have long been priced-in.
Even news that the Bank of England’s (BoE) Kristin Forbes, who had boosted GBP AUD earlier in the week with hawkish comments suggesting an interest rate hike, was due to step down from the Monetary Policy Committee (MPC) in June failed to stop the Pound gaining.
Optimistic Comments from RBA Lowe Prevents Strong GBP AUD Gains
Pound gains have been limited by recent comments from Reserve Bank of Australia (RBA) Governor Philip Lowe.
Worries that the RBA was likely to take steps to weaken the Australian Dollar, which some have claimed is overvalued, were softened after he commented that strong recent growth has made it ‘hard to say that the exchange rate is fundamentally too high’. He explained;
‘If the global outlook were to change and the exchange rate/interest rate combination led to growth being downgraded, then you could make the case that the exchange rate was too high. But at the moment I struggle to say the configuration is leading to growth outcomes that aren’t satisfactory.’
This helped prevent the Australian Dollar from making bigger losses, keeping GBP AUD only marginally above opening levels.
GBP AUD Forecast; Busy Data Day Promises Exchange Rate Volatility
There is plenty on the economic calendar today for both the UK and Australia to keep GBP AUD moving.
The UK is set to release trade balance figures and industrial, manufacturing and construction output data – all for December.
Meanwhile, Australian home loans, investment lending and value of loans data will accompany the RBA’s latest Statement on Monetary Policy.