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Speculation over RBA Cutting Interest Rates Helps GBP/AUD Advance

Last week’s high: AU$1.8441

Last week’s low: AU$1.8156

 

GBP/AUD Registers Gains on ‘Aussie’ Weakness despite Lack of Drive in Pound Movement

Last week was another one of Brexit uncertainties leaving investors hesitant to move much on the Pound. Even as Parliament returned from its Easter recess, investors felt there would be no fresh Brexit developments any time soon, and this is keeping Sterling limp.

Despite a lack of new support for the Pound last week, GBP/AUD still advanced due to some broad weakness in the Australian Dollar.

In the middle of the week, Australia’s Q1 Consumer Price Index (CPI) inflation rate fell well short of expectations, coming in at just 0.0% quarter-on-quarter and 1.3% year-on-year.

The report had a direct impact on Reserve Bank of Australia (RBA) interest rate cut bets, and investors now predict that the RBA could cut rates within the next three months. This led to a sharp selloff in the Australian Dollar which was the primary cause of GBP/AUD gains.

Demand for the Australian Dollar rebounded a little before markets closed for the week and knocked GBP/AUD down from its best levels. This was due to hopes that the US and China were close to reaching a trade deal, which bolstered market demand for trade-correlated currencies like the ‘Aussie’.

 

AUD Outlook: UK and Australian PMIs Could Influence GBP/AUD Outlook

As last week’s Australian data led to a surge in Reserve Bank of Australia (RBA) interest rate cut bets, AUD movement is likely to remain weak unless some upcoming data shows signs of economic rebound.

This week’s economic calendar won’t be quite as busy as last week’s. However, with April manufacturing and services PMI data from both Australia and the UK due from Wednesday through Friday, some surprising results could inspire a shift in GBP/AUD.

If Australian manufacturing and services come in much better than expected, it could bolster hopes that Australia’s economic is rebounding from an economic slowdown, to the benefit of AUD.

As for the Pound, while this week’s Bank of England policy decision could prove influential if it surprises, any Brexit developments would be much more likely to cause GBP/AUD movement.

 

 

Key Events

30th April

00:01 UK GfK Consumer Confidence

02:30 Australian Private Sector Credit

1st May

Australian Manufacturing PMI

09:30 UK Manufacturing PMI

09:30 UK Mortgage Lending and Approvals

2nd May

02:00 Australian HIA New Home Sales

09:30 UK Construction PMI

12:00 Bank of England Policy Decision

3rd May

Australian Services PMI

02:30 Australian Building Permits

09:30 UK Services PMI

 

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Alastair Archbold
Currency Trader
T: 01442 892 062

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