Pound to Aus Dollar (GBP/AUD) Exchange RateRises on Hopes of Increased BoE Rates

November 24, 2014 - Written by Frank Davies

STORY LINK Pound to Aus Dollar (GBP/AUD) Exchange RateRises on Hopes of Increased BoE Rates

The Pound (currency:GBP) advanced against the Australian Dollar (currency:AUD) as forex investors speculate that the Bank of England (BoE) could increase interest rates higher than other nations even if there’s a delay before the first initial increase.

Meanwhile, the Australian Dollar was pressured lower as the price of iron ore continues to fall with the worst yet to come according to some economists.

The price of iron ore has slipped below $70 US Dollars per tonne, which caused anxiety amongst producers.

Moreover, Australian mining investment is expected to fall over 40% in four years.

BIS spokesman Adrian Hart commented: ‘Already we’re seeing a substantial slump take place in iron ore and coal investment around the country but now with the LNG investment boom about to end we’re about to see the biggest slump ever in mining investment.’ The recent fall in prices is expected to be a precursor to a massive tumble yet to come.

The Pound to Australian Dollar exchange rate is +1.15 pct higher at 1.82326 GBP/AUD.
The Euro to Australian Dollar exchange rate today is converting +1.3 per cent higher at 1.44387 EUR/AUD.
The US Dollar to Australian Dollar exchange rate is +0.77 pct higher with a conversion rate of 1 USD equals 1.16100 AUD.

PBoC Rate Cut Offered Australian Dollar Exchange Rate Gains

However, the Australian Dollar was offered some support recently when the Peoples Bank of China (PBoC) cut its interest rates for the first time in over two years.

With Chinese growth looking likely to be bolstered from the rate cut, the Australian Dollar gained. Trader Stephen Innes stated: ‘It was received positively and commodity sensitive currencies like the Australian dollar and the New Zealand Dollar got some boost from the cut.

Traders are expecting commodities to remain firm or move higher short term, and this will make trading pairs like the Aussie a bit tricky.’

Pound Investor Sentiment Climbs

Meanwhile, the Pound enjoyed gains from a resurgence in investor sentiment on talks of interest rate hikes.

The Sterling exchange rate has been extremely sensitive to talks of increasing borrowing costs in the past, and investors in the Pound will be extremely interested in Tuesday’s Bank of England speech. BoE Governor, Mark Carney, will be speaking in London and any talk on the topic of interest rate hikes could see exchange rate movement.

Last week saw two policymakers in the Monetary Policy Committee (MPC) vote away from the rest of the BoE doves for the fourth consecutive meeting, instead voting for an immediate increase in interest rates.

Wednesday will be an interesting day for the Pound when the UK Gross Domestic Product (GDP) figures are released. On the year, UK growth is expected to remain at 3.0% in the third quarter as it did in the second. Imports and Exports figures are also out as well as CBI Reported Sales numbers. The sales index is expected to fall from 31 to 28 in November.

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