Pound to Australian Dollar (GBP/AUD) Relatively Static Ahead of Central Bank Developments

March 16, 2015 - Written by James Fuller

STORY LINK Pound to Australian Dollar (GBP/AUD) Relatively Static Ahead of Central Bank Developments

The Pound remained in a tight range against the Australian Dollar on Monday ahead of central bank actions throughout the rest of the week. The Reserve Bank of Australia is due to release its March meeting minutes on Tuesday and they could be a major factor of influence for the Oceanic currency. Economists have suggested that further cuts to the benchmark interest rate could take place in the near future after the recent surprise 25 basis point decline. Industry expert Stephen Miller commented: ‘We anticipate further rate cuts; we’re seeing significant declines in the prices of Australia’s commodity exports. If we put all those things together we could well see the ‘Aussie’ Dollar down towards 70 US cents in the second half of this year.’

The RBA has repeatedly stated that the Australian Dollar is overvalued and suggested that a softer currency would be preferable. Therefore, the central bank has jawboned the currency, as well as reducing interest rates, in an attempt to push it lower. Industry expert Ray Attrill stated: ‘A period where the currency is potentially undervalued relative to its fundamentals is something that the RBA seems to think would be a good thing for the economy. They haven’t got anything to fear from an inflation standpoint.’

Meanwhile, the UK is experiencing a quiet day for data, with only Rightmove House Prices available. The UK saw house prices increase by 1.0% in March after February’s 2.1% rise. The annual figure dropped from 6.6% to 5.4%. The average UK house price is now residing just short of all-time highs as older people use their pension pots to invest in the market. Rightmove Director Miles Shipside commented: ‘Agents report a high level of interest from new landlords or ‘granlords’, who are typically first time, retirement age, buy-to-let investors. With the highest returns for the lowest investment being at the lower end of the market, the first-time buyer property sector will be the greatest recipient of any increase in demand from investors with substantial pension pots.’

Australian Weekly Consumer Confidence is still yet to come in Monday’s session and could slightly influence the ‘Aussie’. In addition to the RBA meeting minutes on Tuesday, Westpac’s Leading Index for February will also be released and could cause significant movement in the market. The January figure had resided at 0.1%.

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TAGS: Australian Dollar Forecasts Currency Predictions Daily Cur Forecasts