GBP AUD Exchange Rate Gains, GBP EUR Rate Down Following Carney?s Words

Modified: Tuesday, 5 February 2013 15:02 BST - Written by Ben Hughes

STORY LINK GBP AUD Exchange Rate Gains, GBP EUR Rate Down Following Carney?s Words

The Pound has gained ground against the Australian Dollar during today’s session thanks to events in Australia overnight, where the Reserve Bank of Australia made its monthly policy announcement. As anticipated, Australia’s central bank decided to maintain its key lending rate at 3.00%; however the accompanying statement provoked a bout of selling pressure on the Australian currency. The RBA’s assessment that there was ‘scope to ease policy further’ as the year progresses, should economic indicators warrant such an action. The dovish bias of these words sent the Pound Australian Dollar up a high as 1.5187 earlier.

Elsewhere, today’s session has provided a salutary reminder of the extent of the current weakness of the Pound Sterling. This morning’s UK data showed that the key services sector of the UK economy unexpectedly returned to growth last month. However, the Pound still lost ground against the vast majority of the other sixteen most-actively traded global currencies.

Prospects for the Pound on the day were not assisted by comments from the Bank of England’s next Governor, Mark Carney, who stated in a set-piece speech that the world’s central banks had not yet ‘maxed out’ their options for further monetary easing. Carney’s comments were taken as a tacit affirmation of his ultra-dovish credentials, suggesting that there may be more Quantitative Easing for the UK when he takes over the top job at the BoE in the middle part of the year. A further cut to UK interest rates also looks a possibility. The Pound has given up its early gains against the euro as a response to Carney’s words, sending the GBP EUR exchange rate down to 1.1616.

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TAGS: Australian Dollar Forecasts Currency Predictions Euro Forecasts Eur Forecasts