Advance Predicted for Pound to Australian Dollar GBP AUD Exchange Rate Despite Reserve Bank of Australia Decision

August 4, 2015 - Written by Ben Hughes

STORY LINK Advance Predicted for Pound to Australian Dollar GBP AUD Exchange Rate Despite Reserve Bank of Australia Decision

UK Services Data, Australian Employment Numbers to Impact GBP/AUD Trading

As the Reserve Bank of Australia removed comments that the domestic currency still needs to experience significant depreciation from its policy statement, the 'Aussie' rallied across the board. Whether the GBP/AUD pairing holds its declines largely depends on how today's UK Services PMI prints and whether Australia's upcoming employment numbers disappoint.

Earlier...

AUD Conversion Rate Recovers from Multi-Year Lows after RBA Decision, AUD/GBP, AUD/USD Gain

The Australian Dollar (currency : AUD) stole the show during last night’s Asian session, following a decided change in tone from the Reserve Bank of Australia (RBA).

The Australian central bank’ policymakers voted against making any alteration to its currency monetary policy stance and opted to maintain its key lending rate at its current record low of 2.0%; in truth analysts had been expecting such an outcome, so the move did not serve to unduly strengthen the Aussie. However, the language used by RBA Governor Glen Stevens certainly did help the Australian unit to significantly improve against nearly all of the other sixteen most actively traded global tenders.

RBA No Longer States that 'Further Depreciation' is Needed for the Australian Dollar

Leading up to last night’s policy announcement, the RBA had consistently noted in the minutes it sends out with its decisions that, ‘further depreciation’ was needed for the Aussie in order to see it trading at fair value. However, the notes to this month’s announcement contained a significant change in tack, replacing its previous ‘further depreciation’ guidance, replacing it with the following words -

‘the Australian dollar is adjusting to the significant decline in key commodity prices’.

FX Forecast Today: Pound Predicted to Hold Declines Ahead of BoE Inflation Report

The sea change from the RBA has lead several prominent analysts to forecast that the Australian unit may now begin to recover against the other major global currencies. The National Australia Bank released a note earlier stating that, ‘in the context of the 4 per cent fall in the trade-weighted index during July, the RBA is right to be suitably vague about whether they would still welcome further depreciation.’ The memo went on to point out the paradox that the Australian central bank’s policymakers, ‘almost certainly they would (prefer a weaker Aussie), given these ongoing commodity price pressures.’
The National Australia Bank’s assertion that, ‘since the currency is now moving strongly with commodity prices, the board evidently felt they no longer need to be publicly making the case for a still weaker currency,’ suggests that they predict that the Australian unit may weaken further moving forward.

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TAGS: Australian Dollar Forecasts Currency Predictions Daily Cur Forecasts