Losses Forecast for Pound Sterling Australian Dollar Exchange Rate GBP AUD

October 21, 2015 - Written by Minesh Chaudhari

STORY LINK Losses Forecast for Pound Sterling Australian Dollar Exchange Rate GBP AUD

Investors already knew that the Reserve Bank of Australia (RBA) had opted to maintain its headline interest rate at 2.00% at its October monetary policy meeting, however this didn’t stop the minutes of the get-together, published during the early hours of yesterday morning, from triggering significant price action for the Australian Dollar (currency : AUD).

GBP/AUD Conversion rate Declined in Response to Positive RBA Policymaker Comments

The memos of the RBA’s most recent gathering provided the Aussie with a significant push in the right direction thanks to policymakers’ comments regarding the Antipodean nation’s property market.

The Pound Sterling Australian Dollar exchange rate dropped to as low as 2.1208 GBP AUD following the RBA board’s observation that, ‘domestic sources of risk to financial stability in Australia continued to revolve mainly around developments in local property markets,’ and went on to note that, ‘building approvals for new apartments remained very strong over 2015, even though rental markets appeared soft in some areas.

The divergence between commercial property valuations and rents had widened further, with strong domestic and foreign investor interest for new and existing office buildings in particular, even though vacancy rates were quite high.’

Australian Housing Bubble to Prevent RBA from Easing Policy

Investors took the fears of a housing bubble emerging expressed by Aussie policymakers as a tacit admission that they do not have the scope to further cut domestic interest rates and the Dollar from Down Under benefited as a result.

Positive sentiment towards the Aussie was also fuelled by the RBA’s assertion that official data was expected to reveal that low interest rates and a weaker local currency helped the Australian economy record stronger levels of growth during the three months to the end of September.

Such a forecast from the RBA is expected to see the Aussie strengthen against the Pound In the short to medium term. The one threat to such an outcome coming to pass remains a deterioration in the tone of Chinese economic statistics.

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TAGS: Australian Dollar Forecasts Pound Australian Dollar Forecasts