The Australian dollar has been under a little pressure this week after the Reserve Bank of Australia (RBA) cut interest rates earlier in the week. Interest rates were cut from 1.75% to 1.5% in a move that may or may not have happened as it was expected to be a very close call. The decision to cut was based on falling inflation which the RBA wanted to address although more detail will be provided on Friday with the release of the Monetary Policy Statement which should make for interesting reading. This could provide future direction for the Aussie in terms of potential future rate cuts.
Despite the decision to cut rates the Australian dollar has proved to be surprisingly resilient. Considering the last time the RBA cut there was a huge market movement with the dollar weakening by more than 10 cents against the pound. This time the dollar has been somewhat stable against the pound.
Bank of England meeting Today – Impact on GBP AUD
One of the reasons the dollar has not lost so much ground against the pound is due to the pending Bank of England meeting today where an interest rate cut is widely expected for the UK. This is generally sterling negative and there is growing speculation that there may be an offer of more Quantitative Easing (QE) which would also help weaken the pound. For anyone selling Australian dollars there could be a good opportunity after the event if the pound falls lower.
I believe there will be some sort of action from the Bank of England today although it may not be as big as some are hoping for. The risk for anyone selling dollars is that a lack of action could see the pound strengthen very quickly if the Bank of England disappoints. This is what happened at the last July meeting with no rate cut and whilst it doesn’t seem likely today, never say never.
This would be the first time since 2009 when the Bank of England last cut interest rates so any decision to cut today is major news and there should be high volatility on the back of the decision !
If you have an upcoming GBP or AUD currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on [email protected]