The pound to Australian dollar interbank exchange rate stands at 1.9139 today. This is its highest in three weeks, or since December 18th 2019.
By contrast, back on December 23rd, sterling was as weak as 1.8669 versus the so-called Aussie. So it’s since strengthened by 2.51%, or by over 4.5 cents.
One partial explanation why sterling’s value versus the Australian dollar on the interbank market has strengthened, is because the Reserve Bank of Australia (RBA) is being tipped to cut interest rates in February, below their current 0.75%.
This is because Australia is experiencing intense bush fires, burning millions of hectares of land and destroying hundreds of homes.
As a result, the RBA looks likelier to reduce borrowing costs, to shore up Australia’s economy during this natural disaster. Traditionally, lower interest rates tend to weaken the value of the Australian dollar.
Sterling Strengthens as UK Services PMI for December Upgraded
The GBP to AUD interbank exchange rate has risen, in part because the UK’s services sector performed better than previously thought in December.
According to watchdog IHS Markit’s revised PMI (Purchasing Managers’ Index) yesterday, UK services activity was lifted to 50.0, from the previous “flash” estimate of 49.0.
This 50.0 is exactly the figure that separates economic growth from expansion, so tells us that UK services stagnated in December, rather than shrinking. This has lifted sterling’s value versus the Australian dollar.
GBP to AUD Might Be Affected by UK and Australian Economic Data
Turning to the rest of this week, the sterling vs Australian dollar interbank exchange rate could be affected, both by UK and Australian economic releases.
In the UK, the British Retail Consortium (BRC) releases its UK retail sales figures for December this Thursday 9th January, at 00.01 GMT. In November, UK retail sales fell by 4.9%, so we’ll see if sales improved over Christmas, which might affect sterling.
Meanwhile, Australia’s economic data includes building permits for November, released on Wednesday 8th at 00.30 GMT and forecast at 0.4%. Also, Australia’s trade balance for November is made public on Thursday 9th at 00.30 GMT, and predicted at AU6,100 million.
If these data exceed or disappoint expectations, it may affect the Australian dollar, alongside the developing bush fires.
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