The AUD to GBP exchange rate tumbled from earlier gains after the Bank of England’s latest interest rate announcement. The Aussie dollar rallied above 0.5600 around the event before it slumped lower to close near 0.5550.
AUDGBP is trading at 0.5560 on Friday and the pound could build on recent gains after the Bank of England removed any expectations for imminent stimulus measures. The central bank also predicted a strong bounce for the economy after the first quarter.
Bank of England Boosts Bullish Sterling Traders
The Bank of England gave sterling bulls a boost by holding interest rates as expected at the record low levels of 0.1%. This move was expected by analysts, but the bank also declined to add any further stimulus measures and that has seen the British pound supported.
The BoE’s economists have projected a slump of over 4% in first quarter GDP due to the current lockdowns, but the projection is for a strong bounce in Q2. The bank also saw a return to pre-virus economic growth by March 2022.
The Bank of England warned lenders to start preparing for negative interest rates in July this year in the event of another virus-driven crisis, but the recent signing of the Brexit agreement and the country’s fast-moving vaccination schedule has removed the need for negative rates.
Next month will see the UK Chancellor Rishi Sunak delivering the latest budget and the BoE were happy to hand over the reigns. Sunak will now have to tackle issues such as the furlough program and the end of VAT cuts. Energy prices are also rising, which is seeing inflation move higher across Europe.
The trillions of dollars of stimulus delivered by central banks was the easy part and now the real job will be to steer the ship through the choppy waters.
Perth Ends Lockdown as Victoria Also Sees No New Cases
The Western Australian city of Perth has ended the snap five-day lockdown, which was done because of one positive virus test. Despite ending the lockdown, strict rules and masks will remain in place.
The news was announced on Friday with the health department’s Brendan Murphy, suggesting that vaccines may not remove the need for the quarantines of travellers entering the country. The UK are also about to enforce a 10-day lockdown of visitors in government-approved accommodation. Matt Hancock has consulted New Zealand and Australia on the policy, but critics are asking why he didn’t do that a year ago when the country saw 50,000 visitors a day entering the UK untested.
The Australian central bank moved on Monday to double its recent bond-buying programme to A$200 billion as the economy winds down the government’s wage subsidy plans. The country is seeing mixed results with strong exports to China, but the labor market is still stuck with an unemployment rate near 6.6%.
The AUD to GBP rate is now on track to test the next support levels at 0.5500. Speak to us today using the form below to discuss these factors in further detail, and how they are likely to impact your upcoming currency exchange.