GBP/AUD Exchange Rate Rises on RBA Lowe Comments
The Pound to Australian Dollar (GBP/AUD) exchange rate is edging higher again this morning in the wake of comments by Reserve Bank of Australia (RBA) Governor Philip Lowe
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8304, up roughly 0.3% from this morning’s opening rate.
Australian Dollar (AUD) Dented by RBA’s Gloomy Outlook
The Australian Dollar (AUD) is on the back foot this morning in the wake of comments from the RBA’s Philip Lowe as he warns the state of Victoria’s renewed lockdown is ‘broadly offsetting’ the recovery taking place elsewhere in the country.
Lowe warned this could see any meaningful pick-up in economic growth delayed until the last quarter of 2020, as Victoria is likely to cut 2% off of GDP.
He also warned that weak consumer sentiment will contribute to the slower recovery.
Lowe said:
‘People’s attitudes to spending are changing because of the pandemic. It is probable that households and businesses will remain more cautious and that this will affect consumption and investment. How long this change might last is hard to tell.’
However at the same time, Lowe’s comments on the Australian Dollar helped prevent AUD exchange rates from falling further.
Lowe pushed back against suggestions that the RBA should intervene in the currency market to curtail AUD strength, in light of the ‘Aussie’s meteoric rise over the past few months.
Pound (GBP) Buoyed by Reopening Plans
At the same time, the Pound (GBP) is firming this morning as the UK prepares to reopen more of its economy this weekend.
From Saturday, bowling alleys, casinos and various beauty treatments will be able to resume operations.
Indoor theatre, music and performance venues will also be able to reopen, while some sporting events will have spectators for the first time since the start of the pandemic.
The latest easing of lockdown rules had previously been scheduled for 1 August, but was delayed over concerns that coronavirus cases were on the rise again.
With most of the UK economy now reopened, GBP investors will be more optimistic on the chances for a V-shaped recovery this year.
GBP/AUD Exchange Rate Forecast: Will Robust Inflation Figures Offer More Support to Sterling Next Week?
Turning to next week’s session, the Pound to Australian Dollar (GBP/AUD) exchange rate may continue to punch higher should the UK’s consumer price index reveal that inflation continued to accelerate in July.
Also, of note to GBP investors will be next week’s PMI figures, which may also buoy Sterling sentiment.
Economists forecast that business activity in the UK will have continued to have expanded at a robust pace in August, thanks to the UK’s government’s eat out to help out scheme and the reopening of more parts of the economy.
In the meantime, the publication of the minutes from the Reserve Bank of Australia’s latest policy meeting will be in focus at the start of next week.
These could put some additional pressure on the ‘Aussie’ if they reaffirm the RBA’s dovish outlook for the Australian economy.