Pound Australian Dollar Exchange Rate Stable Ahead of BoE
The Pound Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range so far this morning, as investors await the BoE’s latest rate decision.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.7871, virtually unchanged from this morning’s opening rate.
Pound (GBP) Rangebound as BoE Rate Decision in Sight
The Pound (GBP) is holding steady so far this morning as markets brace for the Bank of England’s (BoE) rate decision later this afternoon.
The BoE is widely expected to leave its monetary policy untouched following its March meeting, placing the focus instead on the outlook of policymakers.
In light of the UK’s recent success with its vaccine rollout, and the government’s plans for a sustainable rollback of coronavirus restrictions, there is a good chance that the BoE’s economic outlook will be broadly positive.
This could give hope to GBP investors that the BoE could be in a position to begin tightening its monetary policy sooner rather than later, and bolster the Pound Australian Dollar exchange rate.
Michael Matthews, fund manager at Invesco suggests:
‘The UK economy is likely to experience a relatively vigorous expansion in the second quarter as Covid restrictions are lifted.
‘If the MPC emphasises the strength of the economic recovery, it could signal to investors a sooner than expected withdrawal of monetary stimulus.’
On the other hand, BoE Governor Andrew Bailey signaled earlier this week that the bank will continue its bond purchases through 2021, so any talk of tapering could be limited.
Australian Dollar (AUD) Bolstered by Strong Employment Figures
Meanwhile, after soaring on Wednesday amidst the sharp drop-off in the US Dollar, the Australian Dollar (AUD) remains well supported this morning following the publication of Australia’s latest jobs report.
According to data published by the Australian Bureau of Statistics (ABS) the number of employed people rose by 88,700 last month, rising from 29,500 in January and easily beating expectations for a more modest rise of 30,000.
This resulted in domestic unemployment plunging from 6.4% to 5.8%, a new post-pandemic low.
While the bumper job figures were cheered by AUD investors, some analysts urged caution, warning that the end of the JobKeeper wage subsidy at the end of March could result in another rise in the unemployment rate.
Pound Australian Dollar Exchange Rate Forecast: UK Vaccine Shortage Concerns to Weigh on Sterling Sentiment?
Looking past the Bank of England’s rate decision to the end of the week, the Pound Australian Dollar exchange rate could face an uphill battle amidst new concerns over a shortfall in vaccines in the UK.
The NHS warned on Wednesday that it is facing a ‘significant shortage’ of vaccines in April, which would delay the rollout to under 50s by at least a month.
Unsurprisingly this has unnerved some GBP investors, amid fears the delays could result in the UK government being forced to alter its reopening plans.
Meanwhile, the publication of Australia’s latest retail sales report overnight could provide a lift for the ‘Aussie’, if sales growth remained positive as expected in February.