Pound to Australian Dollar Exchange Rate Fluctuates Ahead of Fed Meeting Minutes
Update 16:35 BST 19/08/2020:
After this morning’s tumble, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate rebounded.
GBP/AUD neared its early-week lows, but has recovered into the interbank region of 1.82 again.
However, GBP/AUD still trends below the week’s opening levels at the time of writing.
The Pound (GBP) lacks drive despite stronger UK inflation, but the Australian Dollar’s (AUD) appeal is also limited ahead of Federal Reserve meeting minutes due later.
(Originally published 10:08 BST 19/08/2020)
Pound to Australian Dollar Exchange Rate Slips after Tuesday Rebound Attempt
Despite recovering to above the week’s opening levels yesterday, the Pound to Australian Dollar (GBP/AUD) exchange rate is sliding again today. Investors are buying the Australian Dollar (AUD) amid central bank policy divergence.
GBP/AUD has been broadly volatile lately. After opening last week at the interbank level of 1.82, GBP/AUD spent much of the week fluctuating before settling just a little higher.
This week’s movement has been similarly mixed so far. After touching a low of 1.81 earlier in the week, GBP/AUD attempted a rebound yesterday, just barely skimming the level of 1.83.
At the time of writing on Wednesday, GBP/AUD trends just below the week’s opening levels following a slide this morning.
Pound (GBP) Exchange Rates Limp despite Jump in Inflation
This morning saw the publication of Britain’s July inflation rate report. The data came in well above expectations, with the yearly rate coming in at 1.0% rather than the expected 0.6%.
Investors didn’t find much joy in the data, as it didn’t offset Britain’s major economic concerns such as jobs.
📢#UK consumer price #inflation 1% July vs 0.6% June
📈 Consumer habits impact prices
☁️ No usual summer discounts
😢 More job losses occurring
💷 Cost of goods + TY vs LY
🌍 We are in a #recession
💸 #Financial literacy required #business #newshttps://t.co/uzIag8rjx2— Sonya Barlow – Tech, Travel & Talk (@sonyabarlowuk) August 19, 2020
According to Jal Malhi, Global Market Strategist at JP Morgan Asset Management, the data is likely not enough to influence Bank of England (BoE) outlooks:
‘At this stage we doubt this will prevent the Bank of England providing further support to the economy. But if these upside surprises continue it may add some hesitancy.’
Britain’s outlook continues to be weighed by coronavirus and Brexit concerns. Investors are keeping an eye on UK-EU Brexit talks this week.
Australian Dollar (AUD) Exchange Rates Benefit from Rival Weakness Ahead of Fed News
The Australian Dollar (AUD) has been fairly resilient this week so fa, despite concerns about Australia’s coronavirus outlook.
The Reserve Bank of Australia’s (RBA) latest meeting minutes were less dovish than expected. On top of this, Australia’s rate of coronavirus infections appears to be slowing.
Investors are more willing to buy the Australian Dollar today. It comes amid expectations that the RBA is more optimistic than other major central banks, such as the Federal Reserve and Reserve Bank of New Zealand (RBNZ).
The RBNZ has indicated that negative interest rates are on the table, while the RBA continues to indicate it will not consider negative rates.
Today’s Australian Westpac leading index data was unsurprising and had little impact on AUD. The ‘Aussie’ is firming higher amid expectations that the Federal Reserve could also become more dovish.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Awaits Fed News and PMI Stats
This evening will see the Federal Reserve publish its latest meeting minutes report. If the Fed is even more pessimistic about the US economic outlook than expected, the Australian Dollar (AUD) may be more appealing.
On the other hand though, a slightly more hawkish Fed could dampen ‘Aussie’ appeal.
The Australian Dollar’s appeal would be even more dented if Australia’s coronavirus situation worsens though. As a result it will remain closely watched. Any possibility of new lockdown in major regions could cause deeper AUD weakness.
Pound (GBP) investors will be more focused on potential Brexit developments.
At the end of the week though, PMI data and UK retail stats could cause movement.
The Pound to Australian Dollar (GBP/AUD) exchange rate could be knocked even lower if upcoming UK retail and PMI data disappoints markets.