The AUD to GBP exchange rate is trading at last week’s lows as the pair awaits a double central bank release this week. Tomorrow will see the Reserve Bank of Australia announce its latest move decisions on interest rates and monetary policy. This will be followed by the Bank of England on Thursday.
AUDGBP is trading at 0.5570 with the Friday low being 0.5566 and the central banks will decide whether this is a low, or a step on the path to further pound gains.
RBA Already Looking at a Taper of Stimulus
Australia’s central bank has only recently begun its bond-buying efforts, but they are already questioning when they can taper them given the strong recovery in the country’s economy. The RBA is set to keep its key interest rate at a record low of 0.10% on Tuesday, while the bank is only halfway through a six-month, A$100 billion bond-buying program.
The country has seen strength in the jobs market, while sentiment and household savings have improved. Demand from China for iron ore has also been strong as the country escaped a second wave of the virus.
The Bank of England is also set to keep their interest rate unchanged at 0.1% but the path ahead will be different from the quick rebound in Australia. Despite this, the UK economy is on track for a faster recovery than expected via its vaccine rollout and this is the reason for the latest rally in sterling. The BoE will release its latest quarterly outlook and will also give investors clarity on their plans for negative interest rates.
Aussie Economy Set for Another Virus Setback
Australia is set to see another virus lockdown across the whole state of Western Australia due to one coronavirus case. The latest five day set of restrictions applies to almost two million people, despite it being the first case in ten months. Former Prime Minister Tony Abbott had criticised the government only last week for the “hysteria” and knee-jerk reactions to the virus.
The AUD to GBP outlook will see a lot of clarity this week on the path of interest rates and stimulus. That will then see traders considering the developments of the virus. The British pound is gaining as the country continues to vaccinate large amounts of its elderly population and front-line workers. The Australian government had planned to begin vaccinations in late-February, but this timeline could be under threat due to the recent delays in manufacturing and the backlog in other countries.
The AUDGBP could see a move towards the 0.5500 level if the pound continues to gain. The Aussie dollar has been on the back foot in early 2021 after failing at the 0.5720 resistance level. Get in touch using the form below to discuss your upcoming currency transfer involving AUD and GBP.