RBA Statement Increases Australian Dollar Value
In a reversal of earlier RBA-inspired movement, the Australian Dollar has appreciated today thanks to the contents of an RBA monetary policy statement.
According to the text, the RBA was feeling cautiously optimistic about the future;
‘The economy is expected to grow at an annual rate of around 3% over the next couple of years which is a bit higher than estimates of potential growth. The outlook continues to be supported by accommodative monetary policy and an improvement in the global economy’.
The cloud to this silver lining was that the RBA considers the strength of the Australian Dollar as a limiting factor. According to RBA officials;
‘Further exchange rate appreciation would tend to generate a slower pickup in economic activity and inflation than currently forecast.
Some households may feel constrained from spending more out of their current incomes because of high levels of household debt.
This effect would become more prominent if housing prices and other housing market conditions were to weaken significantly’.
BoE Event Aftermath Leaves Pound Devalued on Gloomy Forecasts
The Pound’s poor performance against the Australian Dollar today comes after a Bank of England (BoE) interest rate decision on Thursday.
The BoE left interest rates at 0.25% but caused greater headlines by downgrading growth forecasts across the board.
Among the concerning predictions was an expectation for falling business investment, as well as higher inflation and slower wage growth.
Future AUD GBP Forecast: Australian Dollar Advance Possible on Confidence Printings
The main Australian news in the coming week will be confidence-based, as NAB and Westpac release their measures for July and August respectively.
NAB’s business confidence score is predicted to show growth on Tuesday, while Wednesday’s Westpac consumer confidence index also has growth predicted.
In both cases, higher levels of confidence may cause the Australian Dollar to tick up against the Pound.
When it comes to UK data, traders are primed for Thursday’s spread of trade and production data.
The national trade deficit is predicted to expand, but this may not cause much overall GBP movement.
Greater support could be generated by the construction, manufacturing and industrial production figures out at the same time. In all cases, activity is anticipated to rise; as an added bonus, in most cases rises from previously negative ranges are also expected.
As there won’t be much Australian news at the end of next week, the Australian Dollar could decline against a stronger Sterling over Thursday and Friday.
Recent Interbank AUD GBP Exchange Rates
At the time of writing, the Australian Dollar to Pound (AUD GBP) exchange rate was trading at 0.6063 and the Pound to Australian Dollar (GBP AUD) exchange rate was trading at 1.6488.