The Bank of England minutes which came out at 930am this morning briefly saw the Pound gain against the Australian Dollar but the movement was short lived. 7 of the 2 members voted to keep interest rates on hold with 2 voting for an interest rate rise to 0.75%.
The Pound has fallen recently against the Australian Dollar following two negative announcements regarding inflation this month. The Quarterly Inflation Report from last week was rather negative and this week’s CPI data showed a fall from 1.9% last month to just 1.6% this month.
The Bank of England would have more pressure piled on them to increase interest rates if inflation was on the rise. However, owing to the fall this means that interest rates may not go up as soon as expected. Indeed, I personally think the minutes would be different had the members known that inflation was falling.
The FOMC minutes are due in just over an hour and this will relate to the US’s monetary policy. As the world’s leading economy this often has an impact on the Australian Dollar as it will determine risk appetite for global investors.
As posted last weekend I think we’ll see further Aussie Dollar strength over the next few days although we might see a small recovery for Sterling tomorrow morning if UK Retail Sales come out strongly.
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