The GBP/AUD exchange rate is edging lower this morning after the release of the Reserve Bank of Australia’s (RBA) meeting minutes struck an optimistic yet cautious tone surrounding Australia’s economic recovery.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.7889.
Pound (GBP) Weakens as Investors Await BoE Decision
The Pound weakened today as coronavirus cases and deaths continue to fall across the UK and the vaccine rollout is pushing to get everyone in their 50’s vaccinated within the next few weeks.
Despite numerous EU countries suspending the use of the AstraZeneca vaccine due to concerns surrounding whether the vaccine causes an increased risk of blood clots, the UK is pushing on with its vaccination programme.
Speaking earlier this morning, Foreign Secretary Dominic Raab sought to dispel any concerns surrounding the vaccine for the public, saying:
‘It is safe, people should get the vaccine and I think it has been very clear, both from the MHRA, the UK regulator, that the risks of taking the vaccine are no more than, in terms of for example blood clots, than the population at large.’
‘There is no extra risk on the evidence that we’ve seen, which is why they have authorised the vaccine and haven’t taken any further action.’
On Monday 15 March, 5,089 new cases of coronavirus and 64 deaths within 28 days of a positive test were reported across the UK, as over 24 million people have now received their first dose of the vaccine.
However, Pound investors aren’t hedging their bets ahead of the Bank of England’s (BoE) interest rate decision on Thursday.
Australian Dollar (AUD) Pushes Higher against the Pound after RBA Meeting Minutes Release
The Australian Dollar has found itself pushing higher against the Pound this morning after the release of the RBA’s meeting minutes from March echoed Governor Lowe’s earlier comments following the RBA’s interest rate decision.
The minutes dismissed any concerns that rising commodity prices would cause sustained higher consumer prices as there remains a pause in the rest of Australia’s economy.
The minutes read:
‘The international experience prior to the pandemic had underscored that a sustained period of tightness in labour markets would be needed in order to generate increases in wages growth, and, even then, would put only limited upward pressure on consumer price inflation.’
Analysts from ING commented on the minutes saying that:
‘What is very clear is that the RBA does not intend to change the cash rate target in the near term, or even by the end of 2022, as they allege some markets have been recently pricing.’
‘There is nothing likely on cash rates, though we would not rule out a 2023 hike, because we would also not rule out the Fed hiking by 2023 either, and not being ahead of the Fed seems important to the RBA.’
GBP AUD Exchange Rate Outlook: BoE Decision in Focus
For Pound investors, the main focus comes on Thursday with the announcement of the Bank of England’s (BoE) interest rate decision which is expected to remain at 0.1% to help combat the effects of the coronavirus pandemic.
If the BoE strikes an optimistic tone on the UK’s economic recovery following Governor Andrew Bailey’s comments on Monday, the Pound could see itself pushing higher.
For Australian Dollar traders, employment data from Australia released on Thursday could give an insight into how well the Australian economy is recovery from the coronavirus pandemic.
With employment change forecast to show an increase in those in work during February and the unemployment rate forecast to show a modest decline the ‘Aussie’ could see itself supported further.