The AUD GBP exchange rate was slightly lower on Monday as traders await the latest RBA interest rate meeting. There is no policy change expected and with the Australian economy getting closer to reopening, the market will be looking for the central bank’s thoughts on future stimulus.
The AUD to GBP exchange rate is still trading above the 0.5350 level ahead of the meeting.
Reserve bank interest rate meeting preview
Analysts are not expecting much change in policy from the Reserve Bank of Australia, after the central bank practically settled on policy for the remainder of 2021 at the September meeting. The cash rate will naturally stay unchanged for the foreseeable future, while the RBA also stuck to its decision to reduce weekly bond buying to $4 billion but deferred any review until February.
That means there will be little chance of an adjustment to policy at this meeting and no surprises for the Aussie dollar. RBA Governor Lowe also reiterated in a recent speech that given the economic outlook, he sees no need to raise rates before 2024.
The markets will be looking for the governor’s current view on the Australian economy, as current economic activity remains stifled by lockdowns, but the country’s vaccination rate is nearing the thresholds that will see the restrictions ease.
The latest data releases for Australia revealed GDP growth at 9.6%, CPI growth at 3.8%, and the unemployment rate at 4.5%, but the employment picture is set for further damage. Economists surveyed by Bloomberg recently downgraded their forecasts for Australian GDP growth this quarter from -2.0% to -3.1% but maintained that the economy should rebound the following quarter to stay out of a technical recession. They also tipped inflation to ease back towards the RBA’s target for the year ending 2021 to 2.5%.
Pound sterling stabilises as energy and fuel problems clear
The pound has stabilized from recent troubles in the energy and fuel market but there are still fears of a ‘challenging winter’.
The country’s Chancellor Rishi Sunak has said the government is “determined to do what we can” to mitigate the impact of the recent fuel supply crisis and supply chain problems.
Sunak said that he couldn’t make promises about Christmas being unaffected by the current issues, but that the UK could still think about the future with “a renewed sense of confidence and optimism”.
The chancellor said millions of families are now facing a “challenging” winter and that the current supply chain bottlenecks could continue for months.
He said: “These shortages are very real. We’re seeing real disruptions in supply chains in different sectors, not just here but around the world. We are determined to do what we can to try to mitigate as much of this as we can.”
The pound got a boost last week after the Q2 GDP figure was revised higher and this week will be determined by the Australian central bank update.