AUDGBP Edges Higher as Pound Bulls Show Election Caution

AUD GBP Awaits Australian GDP Growth Figures

The AUDGBP exchange rate was 0.02% higher on Thursday as the UK faces a Bank of England interest rate announcement and the latest Scottish elections. The BoE will give traders a midday update on the economy and that will lead into the exit polls from the latest Scottish elections, where the final polls have shown a potential majority for Nicola Sturgeon.

The AUD to GBP trades at 0.5567 and the pound has failed to capitalise on the latest Aussie dollar failure at the 0.5600 level.

Bank of England growth upgrade and Scottish vote

The Bank of England will hold its key interest rate at 0.10% today but traders will be looking for economic and monetary policy updates. Reuters has said that the BoE will hike its growth forecast for the country.

“The BoE forecast in February that the world’s fifth-biggest economy would grow by 5% in 2021, having slumped by 10% in 2020… But many economists say Britain is now set to grow by more than 7% this year, boosted by its fast COVID-19 vaccinations.”

Analysts at ING said in a note to clients. “Indeed, we think the Bank may announce some tapering of its quantitative easing programme.”

Meanwhile, North of the border, Nicola Sturgeon has warned that “never has so much been at stake” as she makes a last push to push Scottish voters towards another independence referendum. The future of the UK is potentially at stake as Scottish voters head to the polls on Thursday, with a late surge in the polls boosting Sturgeon’s hopes of an overall majority in parliament. Such a result would bring further calls for independence and a strong showing for the Green party will also increase the voices for a second referendum.

The AUDGBP could move higher initially on a strong SNP showing but a vote would likely be a couple of years away and Boris Johnson will not allow it. If Scotland then wanted to push its own vote, it would reopen the Catalonia-Spain debate.

China suspends talks with Australia

China said on Thursday that it was suspending its economic dialogue with Australia as the mood sours between the two countries. China was unhappy with some criticisms levelled at the country by Australia and last year saw trade tariffs imposed on Aussie goods.

“Recently, some Australian Commonwealth Government officials launched a series of measures to disrupt the normal exchanges and cooperation between China and Australia out of Cold War mindset and ideological discrimination,” China’s NDRC said in a statement.

China is Australia’s largest partner and the country will “indefinitely suspend all activities under the framework” of its previous trade talks agreement, the statement said.

Australia described Beijing’s stance as “disappointing,” but added that the government was still open to talks despite the recent setback.

The AUDGBP pair has resistance at 0.5600 and the ability to get above that will depend on the BoE comments and Scottish election result this week.