GBP/AUD Exchange Rate Advances on RBA Rate Cut Speculation

Last week’s high: AU$1.7975

Last week’s low: AU$1.7676

RBA Rate Cut Expectations Undermined the Australian Dollar

The Australian Dollar trended lower throughout last week’s session, with the main catalyst for ‘Aussie’ losses being rising expectations of a third rate cut from the Reserve Bank of Australia (RBA) later in the year.

Fuelling this speculation were comments from RBA Governor Philip Lowe, who stated that the bank is prepared to ease monetary policy further if the Australia economy continues to undershoot targets.

Meanwhile, dominating movement in the Pound last week was the appointment of Boris Johnson as the new UK Prime Minister.

While his appointment will likely increase the risks of a no-deal Brexit, Sterling still strengthened last week as it brought an end to short-term political uncertainty in the UK.

AUD Outlook: Will a Dovish BoE Weaken the Pound?

Looking ahead, we may see the Pound give up some ground this week following the Bank of England’s (BoE) latest policy meeting.

Whilst no policy changes are expected from the bank this week, it’s likely the bank’s forward guidance will be fairly dovish in tone, with Sterling sliding if the bank warns of potential easing in the event of a no-deal Brexit.

For AUD investors the focus will be on the publication of Australia’s latest CPI report, with the ‘Aussie’ potentially strengthening if domestic inflation accelerated in line with expectations in the second quarter.

Key Events

29th July

09:30 UK Mortgage Approvals (Jun)

31st July

02:30 AU inflation Rate (Q2)

23:30 AU Manufacturing PMI (Jul)

1st August

09:30 UK Manufacturing PMI (Jul)

12:00 UK BoE Rate Decision

2nd August

02:30 AU Retail Sales (Jun)

09:30 UK Construction PMI (July)

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To keep up to date with the Australian Dollar, visit the AUD blog in our Currency News section.

Alastair Archbold
Currency Trader
T: 01442 892 062