The Pound has been in comparatively high demand recently, with respectable gains being seen against the Australian Dollar and most other peers.
The Australian Dollar has also managed to creep up overall amid talks of a possible trade deal between the UK and Australia.
Pound Sterling Strengthens after BoE’s Weale Comments
Last week’s highlight for the Pound Australian Dollar exchange rate was 1.7620, while at its worst the Pound trended in the region of 1.7055.
The Pound has managed to advance against the Australian Dollar and most of peers lately, with this performance being a marked improvement on last week’s slump, triggered when Bank of England (BoE) official Andy Haldane strongly hinted that a UK interest rate cut might take place in August.
In the same vein, BoE official Martin Weale has been speaking recently about the impact of ‘Brexit’ on BoE policy decisions; in what has been interpreted as a hawkish stance, Weale has stated that an August interest rate cut is by no means assured, and that ‘firmer evidence’ is needed before such a momentous decision is taken.
With that in mind, it is worth remembering that Weale is only one of nine voters on the Monetary Policy Committee (MPC) and that according to the recent BoE minutes, most members were in favour of a near-term rate cut.
Australian Dollar Stable on Optimistic Forecasts and AU Trade Deal Offer
The Australian Dollar has been performing well lately, as in addition to being boosted by domestic data, the ‘Aussie’ has also been strengthened by news of a possible trade deal between Australia and the UK.
In the former case, Deloitte has estimated that although a $50bn contract with a French company to build submarines for Australia in Adelaide has been important to the national economic outlook, interest rates and the strength of the Australian Dollar are likely to be of greater importance in the long-term.
In addition, Deloitte has also put out an estimate that the Western Australian region’s economy is only undergoing temporary hard times.
In international news, the post-Brexit weeks have brought talks of a free-trade deal between the UK and Australia, something that can only be mutually beneficial should it become a reality.
GBP/AUD Exchange Rate Forecast
This week, Pound Sterling/Australian Dollar exchange rate movement may occur as a result of tomorrow’s UK inflation rate stats, the Reserve Bank of Australia (RBA) minutes out on the same day, Wednesday’s UK claims, unemployment and earnings results and Friday’s UK PMIs for July.
In brief, expectations are for a rise in annual inflation but a fall on the month, rising claims, flat unemployment at 5%, worsening earnings excluding bonuses and negativity for July’s PMI flashes.