The Pound to Australian Dollar exchange rate slumped this morning, following an optimistic Reserve Statement of Monetary Policy.
At the time of writing the pairing is currently trading at around AU$1.7971.
Pound (GBP) Struggles as BoE Statement Provides Little Relief
The Pound is struggling today as the Bank of England’s (BoE’s) unchanged interest rate yesterday has caused Sterling to lose momentum.
The BoE left UK monetary policy frozen as expected, and also lowered its Q1 2021 growth forecasts for Britain.
Though the Pound has been supported by the bank’s comments regarding negative interest rates, the BoE however has told banks to prepare for the possibility of negative rates within six months, though clarified that negative interest rates are not imminent.
Meanwhile in coronavirus developments it has been announced that those flying to the UK from ‘red list’ countries will have to quarantine in a government-approved hotel from the 15th of February, the announcement comes as the UK tries to battle the spread of deadlier, more infectious strains of the virus.
Australian Dollar (AUD) Supported by RBA Statement
The Australian Dollar has been supported today as the RBA was optimistic about the state of the Australian economy following the Statement of Monetary Policy.
The statement following the RBA’s decision to Leave interest rates unchanged and expand bond-buying by another AU$100 billion earlier in the week.
The bank said in its statement today that:
‘The outlook for the global economy has improved since the November Statement on Monetary Policy. While the global recovery lost a little momentum late last year after a resurgence of COVID-19 infections in some economies, a number of vaccines have been approved and vaccinations have begun.’
‘Fiscal policy has supported household and business cashflows, and the Victorian lockdown measures weighed less on economic activity than earlier assumed. Consumption has recovered faster, and dwelling and business investment have not been as weak as had been anticipated.’
The Australian Dollar was also supported by global risk-sentiment, with investors becoming increasingly optimistic over the global economic recovery following the coronavirus pandemic.
GBP/AUD Exchange Rate Forecast: Coronavirus Remains in Focus
The Pound to Australian Dollar exchange rate will continue to be dictated by any further coronavirus developments, and if the UK’s vaccine rollout remains a success we could see Sterling push higher.
Pound investors will keep an eye on BoE Governor Andrew Bailey’s speech this afternoon, with further positive comments surrounding the UK’s economy proving positive for GBP.
AUD investors will be focused on any global coronavirus developments, continuing recovery from the pandemic will push traders to buy more into risk-correlated currencies like the ‘Aussie.’