GBP/AUD Exchange Rate Strengthened by BoE Rate Outlook
The Pound to Australian Dollar (GBP/AUD) exchange rate is on the rise this morning following the easing of expectations for an early rate cut from the Bank of England (BoE).
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9469, up around 0.3% from this morning’s opening levels.
Pound (GBP) Buoyed by BoE Rate Calm
The Pound (GBP) is creeping higher against the Australian Dollar (AUD) this morning, extending yesterday’s rally after incoming Bank of England Governor, Andrew Bailey cast doubts on the prospect of the BoE cutting interest rates before its next monetary policy meeting.
Testifying before the UK’s Treasury Committee on Wednesday, Bailey said that while he would be prepared to act fast to limit the impact of the coronavirus, he believed that more information would be needed before making a decision.
Andrew Bailey insists Bank of England will move quickly on coronavirus https://t.co/44yvzedzZN
— Financial Times (@FT) March 4, 2020
Bailey said:
‘What we need is frankly more evidence than we have at the moment as to how this is feeding through.
‘We are still looking at the evidence and the precise sort of balance of what the shock is likely to be.’
Bailey’s comments quashed speculation that the BoE may have been gearing up for an immediate rate cut.
In a note to clients on Wednesday, Japanese bank Nomura, had predicted that the BoE could follow in the steps of the Federal Reserve and announce an emergency rate cut this week.
GBP investors will now look to a scheduled speech by current BoE Governor Mark Carney this afternoon for more clarity on the BoE’s position and fresh impetus in Sterling.
Australian Dollar (AUD) Undermined by Coronavirus Fears
Meanwhile, the Australian Dollar (AUD) is struggling to find support this morning as the ongoing coronavirus crisis continues to weigh heavily on markets.
As the disease continues to rapidly spread across the global investors are growing increasingly concerned about the economic impact.
This has not been helped by the International Monetary Fund’s (IMF) slashing of its 2020 forecasts for global growth this week, with the Fund warning that economic growth will now drop below last year’s levels.
Unsurprisingly this is weighing on the appeal of the risk-sensitive ‘Aussie’, which continues to trade close to a multi-year low against the US Dollar (USD).
GBP/AUD Forecast: Underwhelming Retail Sales to Drag on the ‘Aussie’?
Looking ahead, the Pound to Australian Dollar (GBP/AUD) exchange rate may look to extend its rally overnight with the publication of Australia’s latest retail sales figures.
Following on from a 0.5% contraction in December, economists are forecasting that sales growth will have stalled in January as Australia’s bushfire crisis keep consumers away from the high street.
As such it’s likely we will see AUD exchange rates weaken overnight as the lacklustre sale figures will keep pressure on the Reserve Bank of Australia (RBA) to continue easing its monetary policy.
In the meantime, GBP investors will also be keeping a close eye on Brexit headlines, amidst signs of friction between the UK and EU in trade talks.