Pound Australian Dollar (GBP/AUD) exchange rate muted amid mixed RBA minutes
The Pound Australian Dollar (GBP/AUD) exchange rate is rangebound today, as markets analyse the Reserve Bank of Australia’s (RBA) meeting minutes.
At the time of writing, GBP/AUD is trading at around AU$1.9247, showing minimal movement from today’s opening levels.
Australian Dollar (AUD) wavers amid cautious RBA minutes
The Australian Dollar (AUD) is rangebound this morning, as markets analyse the latest Reserve Bank of Australia meeting minutes.
The minutes showed that the decision between an interest rate hike and a hold was quite narrowly fought. Furthermore, they outline that the RBA is open to hiking rates further, noting some remaining looseness in monetary policy.
However, a cautious approach ruled out amongst the policymakers, as the RBA considers the sustainability of its tightening. In weighing up the options, they elected to remain more cautious, which may be limiting AUD this morning.
The minutes stated:
‘They agreed that doing so would best balance the Board’s objectives for price stability and full employment. Members noted that the data had evolved in a manner that gave them more confidence that inflation would return to target within a reasonable timeframe while allowing employment to continue to grow.’
Elsewhere, news that the People’s Bank of China (PBoC) has cut the five-year loan prime rate is lifting the market mood a touch. The move is expected to aid a recovery in China’s beleaguered property sector, bringing additional cushioning to the Chinese proxy-currency.
Pound (GBP) quiet ahead of BoE testimony
Investors are awaiting a testimony from Bank of England (BoE) policymakers this morning, leaving the Pound (GBP) static.
BoE Governor Andrew Bailey and other members of the Monetary Policy Committee are due to discuss February’s decision. The UK Treasury select committee are likely to ask about the future path of inflation, alongside the possibility of overtightening risks.
Furthermore, they may discuss how businesses are contending with the historically elevated interest rates may be affecting UK businesses.
If Governor Bailey and other MPC members indicate that interest rate cuts are being considered, the Pound may soften today.
However, if they suggest that inflation remains persistent and rates must remain restrictive, Sterling could gain ground.
Pound Australian Dollar exchange rate forecast: UK private sector data in focus
Looking ahead for the Pound, tomorrow brings the release of the latest industrial trends orders data from the Confederation of British Industry (CBI).
In February, orders are expected to have improved, but remain deep within negative territory. The data could weaken Sterling if it indicates continued industrial weakness.
This is followed on Thursday by the latest preliminary PMI data for the UK’s private sector. The vital services sector is forecast to have slowed in February, which could dent the Pound. However, an increase in manufacturing activity could offset its losses.
For the Australian Dollar, the latest private sector indexes are due overnight on Wednesday. Economists anticipate a return to growth in the Australian service sector, which may lift the ‘Aussie’ against its peers.