The Governor of the Bank of England Mark Carney yesterday delivered a speech saying that he doesn’t think an interest rate hike is imminently on the cards. The comments followed a vote by the economic monetary policy committee last week where the members voted 3-5. 8 members voted for the decision and this is the first time in over 5 years 3 members have voted for a hike. The vote last week caused a jump in the market however that was lost yesterday.
The comments yesterday had an instant effect on the market causing nearly a 1% drop in the GBP/AUD rate. Since the final weeks of the UK election and the subsequent hung Parliament result the Aussie has gained nearly 10 cents in strength against sterling, moving the rate to 1.66. In my opinion I don’t see the rate returning to the 1.60 level last seen in March and any Aussie Dollar sellers should consider capitalising on the last two weeks movements.
Where Next for GBP/AUD?
Now that the Brexit negotiations have started there is potential for the markets to move at an instant. David Davis the UK’s Brexit Minister suggested the talks got off to a positive start and that he was hopeful of much of the same in a press conference earlier this week. The main market influencer will be the announcement of a trade deal between the UK and the EU, the moment that comes Sterling’s fortunes could change.
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