The Pound’s performance against the Australian Dollar has been less-than-impressive recently, with Sterling sliding considerably on a recent pessimistic prediction for future Bank of England (BoE) interest rate decisions.
During the past week, the GBP/AUD exchange rate has fluctuated between 1.8903 and 1.9231.
Sterling Firmed on Savings Scheme
The Pound rose overall yesterday, thanks to a positive development ahead of Wednesday’s major 2016 Budget announcement. The news responsible for lending the Pound support concerned a scheme to incentivise low-income earners by providing bonuses for savers.
The news was not entirely welcome, however, as some critics pointed out that those on the lowest incomes would have to spend, rather than save, in order to avoid real financial hardship.
Pound Plummets on BoE Cut Concerns
The most recent developments for Sterling have been almost universally negative, both in their tone and in the effect they have had on the Pound’s performance.
The biggest detractor has been the announcement that economists see a 23% chance of the BoE cutting the interest rate this year, while elsewhere, the woeful inadequacies of Northern England’s transport links have been exposed as part of a campaign to get high speed rail links set up.
Australian Dollar Dives on RBA Commentary
Yesterday was hardly one of the brightest starts to the week for the Australian Dollar, which fell against most of its rivals. The cause of this was thought to be weak credit card balance and purchase stats for January that were announced early on Monday. Disappointing Chinese data and declining commodity prices also weighed on the South Pacific asset.
In a consecutive instance of damaging news, the earlier Reserve Bank of Australia (RBA) March meeting minutes showed a dovish tone on the part of policymakers, who hinted at interest rate cuts in the future due to sluggish situations in the economies of Asian superpowers Japan and China.
GBP/AUD Exchange Rate Forecast
For the rest of the present week, Pound Sterling/Australian Dollar exchange rate movement may occur as a result of tonight’s Australian Westpac Leading Index for February, as well as tomorrow morning’s UK earnings, claims and unemployment rate stats.
Following on from this will be a speech from RBA Assistant Governor Guy Debelle, as well Australia’s February unemployment rate results for February.
Finally, Thursday afternoon will bring the Bank of England (BoE) interest rate decision for March. If the BoE minutes hint at a future rate cut the Pound could strike new lows against its Australian rival.
Heads Up
Summary of major upcoming data releases that we think may move the market.