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GBP/AUD Exchange Rate Recovers Today as RBA Meeting Minutes Weigh on 'Aussie' Demand, UK Employment Data Ahead

June 16, 2015 - Written by Tim Boyer

STORY LINK GBP/AUD Exchange Rate Recovers Today as RBA Meeting Minutes Weigh on 'Aussie' Demand, UK Employment Data Ahead


Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Gains as RBA Meeting Minutes Call for Weaker 'Aussie' Currency



The RBA has frequently asserted that it would like to see a weaker domestic currency, and this attitude remained in the minutes from the latest Reserve Bank of Australia policy meeting. The minutes saw the Australian Dollar soften against peers like the Pound (GBP), Euro (EUR) and US Dollar (USD).

The central bank stated; 'A further depreciation [in the Aussie] seemed both likely and necessary, particularly given the significant declines in commodity prices over the past year [...] Members noted that a lower exchange rate would have an immediate beneficial effect on some sectors, such as tourism.'


The GBP to AUD exchange rate was trending in the region of 2.0157

Earlier...

Latest Pound Sterling to Australian Dollar FX News: Sterling Sentiment Slips, GBP/AUD Falls



The Pound slipped against the ‘Aussie’ on Monday as investor sentiment in the UK currency declined, despite favourable ecostats. The UK’s latest House Price data managed to climb by 3.0% in the month of June following May’s -0.1% contraction. The monthly surge allowed the annual figure to jump from 2.5% to 4.5%.

Industry expert Miles Shipside commented: ‘The unexpected election outcome has caused a strong rebound, prompting an upturn in buyer demand and helping new seller asking prices to hit their highest ever levels. The election surprise has given a boost to market sentiment, driven by more uncertainty about future economic and taxation policies.’


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UK House Prices Surge after General Election – GBP Exchange Rate Remains Weak against AUD, Stronger against EUR



The rise of 3.0% was the largest recorded since February 2014 and saw the market reverse losses that occurred on account of the UK general election uncertainty. The vote caused some major problems for the UK including a notable slowing in some areas (as demonstrated in house prices) as well as the decline in the GBP exchange rate. However, now there are new issues to worry about in the aftermath of the election such as the upcoming EU referendum. Credits rating agency Standard and Poor’s downgraded the UK’s rating from AAA stable to AAA negative on Friday and now investors fear that the UK’s top rating could be cut.

Potential Downgrade Weighs on UK Currency, GBP Pares Gains against EUR, USD Today



Standard and Poor’s stated: ‘The decision to propose a referendum, with all the economic risks that such a decision entails, was at least partly driven by the government’s intention to contain the influence of the Euro-skeptic UK Independence Party. We also believe that the referendum is aimed at strengthening unity inside the Conservative Party, which has a strong Euro-skeptic wing.’


GBP/AUD Weekly Outlook and UBS Exchange Rate Forecast



Meanwhile, the Australian Dollar could be in for some interesting movement this week with the release of the Reserve Bank of Australia’s June minutes due for release. The record of the latest policy meeting could have a dramatic impact on the AUD exchange rate as investors attempt to price in future rate cuts.

UBS believes: ‘We acknowledge this [recent upbeat Aussie labour data] gives the RBA enough breathing space to keep the cash rate on hold; however, we believe a rollover of growth in domestic housing construction, a lack of non-mining non-residential investment plans, and further job losses from the mining sector should combine to lift the unemployment rate in coming months. If we add these to the evidently strong income headwinds facing households, the risk of one further rate cut should not be completely discounted. Hence, we reiterate our AUDUSD view of 0.75, 0.70 and 0.70 on a three-, six- and 12-month tenor.’





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