Pound to Australian Dollar (GBP/AUD) Exchange Rate Sinks as RBA Holds Interest Rates
The GBP/AUD exchange rate fell by -0.3% today, with the pairing currently fluctuating around AU$1.78.
The Australian Dollar rose today after the Reserve Bank of Australia (RBA) retained its cash rate at 0.1%. The RBA also noted that Australia’s economy was recovering above previous forecasts.
RBA governor Philip Lowe commented:
‘The current monetary policy settings are continuing to help the economy by keeping financing costs very low, contributing to a lower exchange rate than otherwise and supporting the supply of credit and household and business balance sheets.’
In other Australian economic news, today saw the release of the latest Australian Building Permits data for January.
However, the figure revealed a below forecast slide by -19.4 as Covid-19 lockdowns held back Australia’s construction sector.
AUD traders are becoming more cautious, however, after data from the Australian National University revealed that Chinese investment in Australia shrank by over 60% last year.
With China being Australia’s largest trading partner, this has sparked concern for Australia’s economy going forward.
Pound (GBP) Suffers as the Search for the UK’s Brazilian Covid-19 Variant Continues
The Pound (GBP) suffered today as the UK’s search for the Brazilian Covid-19 variant continues. The search has now been narrowed down to 379 homes in the south-east, according to Health Secretary Matt Hancock.
Consequently, GBP investors are becoming more cautious as the Brazilian variant could prove an obstacle to the UK’s vaccination efforts further down the line.
Prof Devi Sridhar, professor of public health at the University of Edinburgh, was optimistic about Covid-19 vaccines, however, saying:
‘I think vaccines are a real cause for optimism and the effectiveness data and reducing hospitalisations and deaths, and now even stopping transmission, are better than any of us could have imagined.
‘This is world changing in terms of having these vaccines as a way out of this pandemic.’
In UK economic data, today saw the release of the latest UK Nationwide House Prices figure for February.
The figure confirmed forecasts rising by 0.7%. However, rising unemployment and concerns for the economy have limited confident in the housing sector.
An analyst at Nationwide commented:
‘The outlook for the housing market is unusually uncertain. There is scope for shifting housing preferences to continue to boost activity, especially if there is further policy support in the budget. Nevertheless, if labour market conditions weaken as most analysts expect, it is likely that the housing market will slow in the months ahead.’
GBP/AUD Exchange Rate Outlook: Australia’s GDP Data in Focus
Australian Dollar traders will be looking ahead to tomorrow’s release of the latest Australian GDP data for the fourth quarter.
Any improvement in the outlook for Australia’s economy in the months ahead would be AUD-positive.
Risk-sentiment will also continue to drive the AUD/GBP exchange rate this week.
If the US stimulus package looks like it will pass through the American congress, then the risk-sensitive AUD would head higher.
Pound traders will be eyeing to UK Services PMI data for February tomorrow. If the UK’s largest sector shows any signs of improvement, then we could see GBP begin to head higher.
The GBP/AUD exchange rate will likely struggle this week if the search for the UK’s Brazilian Covid-19 variant continues.
Consequently, UK markets might be notably more cautious as the new variant may threaten the UK’s easing of lockdown measures in the months ahead.