GBP/AUD rates have spiked today, following the latest Bank of England (BoE) interest rate decision and subsequent minutes. It was widely anticipated that BoE governor Mark Carney would announce a cut in the UK’s base interest rate to 0.25% but when this did not occur, the Pound immediately gained support against the AUD, with the pair moving up 1.7608 at the high.
This move brought much needed respite to those clients holding GBP, following weeks of negative downturns following the recent EU referendum and subsequent Brexit decision. The Pound immediately gained traction and this was intensified when the BoE decided to keep their monetary policy programme on hold, allowing the Pound to rise by almost 5 cents from the day’s low. These gains were diluted by the close of European trading but it is clear investor confidence has improved and whilst I do not expect a move through 1.80 under current market conditions, those clients holding GBP will certainly feel more confident about their positions.
The Pound has struggled for the most part since the Brexit decision but has gained some traction this week prior to today’s decision, following the political stability brought about by Theresa May’s early appointment as Prime Minister. This has removed one layer of uncertainty and brought some investor confidence back to GBP and my gut feeling is BoE may have changed their stance slightly, due to the change in the unexpected change in the political landscape.
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