Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Slips as Chance of RBA Rate Cut Edges Lower

June 24, 2019 - Written by John Cameron

STORY LINK Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Slips as Chance of RBA Rate Cut Edges Lower

Pound Australian Dollar (GBP/AUD) Exchange Rate Falls on an Upbeat RBA

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate fell and the pairing is currently trading at an inter-bank rate of AU$1.8310.

On Monday an upbeat speech from the Reserve Bank of Australia’s (RBA) Governor Philip Lowe likely provided an upswing of support for the ‘Aussie’.

Despite speaking of risks to global growth, the RBA Governor mentioned that the macro growth remains reasonable.

Lowe also mentioned that markets are pricing in rate cuts for major economies, however he refrained from hinting at any policy moves for the RBA.

He also mentioned that global growth has slowed, yet growth was still okay and that the effectiveness of monetary easing would be greater if it was being done globally.

This likely buoyed the 'Aussie' as the chance of an interest rate cut has edged lower.

Sterling (GBP) Slides as UK Consumer Spending Growth May Slide to Lowest in Six-Years

Meanwhile, according to the EY ITEM Club’s forecast, the UK will see the slowest consumer spending growth in 2019 in six years.

The economic forecasting group said that it expects spending to rise by 1.6% compared to last year, although this is faster than the 1.3% estimated rise for the broader UK economy.

Consumer spending was buoyed by strong employment and a pick-up in real earnings, however the outlook is now weaker.

Chief Economic Advisor to the EY ITEM Club, Howard Archer said:

‘The improvement in purchasing power has meant that consumers have been significantly less affected in their spending decisions than businesses by uncertainties over the economy and Brexit.

‘While consumer confidence in late 2018/early 2019 weakened to the lowest level since mid-2013, perceptions of personal finances and a willingness to spend generally held up much better than views of the economy.’

Australian Dollar (AUD) Rises Ahead of Trump-Xi Meeting

Ahead of the Trump-Xi meeting in Japan, Chinese Vice-Commerce Minister Wang Shouwen has said both sides need to make a compromise.

Speaking at a news briefing on the G20 summit, Wang Shouwen stated that trade talks were underway, and gave no further details.

The continuation of US-China trade discussions likely caused risk-appetite to rise, providing an upswing of support for the ‘Aussie’.

Commenting on the upcoming meeting, the Vice-Commerce Minister stated:

‘Mutual respect means each side must respect the other’s sovereignty.

‘Equality and mutual benefit means the consultations have to happen on an equal basis, the agreement to be reached has to be beneficial for both sides.

‘Meeting each other half way means both sides have to compromise and make concessions, not just one side.’

Pound Australian Dollar Outlook: Will a Dovish RBA Weigh on AUD?

Looking ahead to Tuesday, the Australian Dollar (AUD) could slide against the Pound (GBP) following a speech from the Reserve Bank of Australia’s (RBA) Michele Bullock.

If Bullock’s speech is overly dovish, highlighting the increased chance of a further interest rate cut, the ‘Aussie’ could slide.

Meanwhile, it is likely that the Australian Dollar will remain under pressure ahead of this week’s meeting between US President Trump and Chinese Premier Xi Jinping.

If reports suggest that the Trump-Xi meeting is going to be successful, it is likely risk appetite will increase and the Pound Australian Dollar (GBP/AUD) exchange rate will slump.

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TAGS: Pound Australian Dollar Forecasts