The Pound has been improving once again against the Australian Dollar and has moved by almost 4 cents during the course of this week.
The Australian Dollar weakened against the Pound after RBA Governor Philip Lowe’s comments that there was a chance that the Reserve Bank of Australia may be preparing for an interest rate cut later on during 2019.
Tomorrow morning the RBA will announce their latest Monetary Policy Statement, which will cover the issues and the reasons why the members voted as they did at the recent meeting.
The reason why this Statement could be key to the short term future of the GBPAUD exchange rate is because it will give us an insight as to what the appetite is of a future interest rate cut.
With the US Federal Reserve having increased interest rates by 9 times since the end of 2015 although they do not appear to be increasing interest rates at the same pace during this year, the risk for the Australian Dollar is that it does not offer the same yield of interest that is available in the impressive US economy at the moment.
If the RBA do decide to cut interest rates later this year then the likelihood is that this will cause the Australian Dollar to weaken in the future but there are many variable in between including the latest Brexit issues.
UK Prime Minister Theresa May is currently in discussions with European leaders to try and sort out the issue of the Irish backstop as the UK and the EU are currently at loggerheads as to how this scene will play out.
The Bank of England are also due to meet today to decide their latest monetary policy decision. Clearly at the moment there is little chance of any change to interest rates whilst we are just 7 weeks from when the UK is due to leave the European Union so it will be the accompanying press conference that will provide any clues as to what will happen to the Pound vs the Australian Dollar. Bank of England Governor has been rather cautious in his tone towards Brexit so any more of the same could see a small wobble for Sterling later on today.
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Tom Holian firstname.lastname@example.org