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Pound Australian Dollar Exchange Rate Steady, Australian Inflation Beats Forecasts in Third Quarter

October 30, 2019 - Written by John Cameron

GBP/AUD Exchange Rate Flat, Positive Inflation Tempers RBA Rate Cut Fears

The Pound Australian Dollar (GBP/AUD) exchange rate held steady today, with the pairing currently trading around AU$1.875 after Australia’s inflation rate beat expectations and rose from 1.6% to 1.7% in the third-quarter and tempered fears that the Reserve Bank of Australia (RBA) would cut rates this year.

Craig James, an Economist at Commonwealth Securities, commented:

‘The language from the [RBA] policymakers suggest that they are very reluctant rate cutters from here. Rates are low enough and the rate cuts have actually been having the opposite to the desired effect – spooking Aussie consumers.’

Last night also saw the release of Australia’s home sales for September, which bounced back to mid-2018 levels and further provided some uplift for the Australian Dollar.

However, growing uncertainty surrounding US-China trade relations are holding back some of the ‘Aussie’s gains today. This follows Beijing’s hesitation to commit to buying US farm goods, which is a major sticking point in US-China relations.

With China being Australia’s largest trading partner, the AUD/GBP exchange rate has remained steady as Australian markets await further developments between the two superpowers.

GBP/AUD Exchange Rate Steady, Boris Johnson Secures December General Election

The Pound (GBP) failed to gain on the ‘Aussie’ today after Prime Minister Boris Johnson won a vote for a 12 December general election last night, with the Parliamentary deadlock finally challenged by a 438 to 20 victory following Labour leader Jeremy Corbyn declared support for the bill.

Mr Corbyn commented:

‘I’m ready for it, we’re ready for it. Because we want to be able to say to the people of this country there is an alternative to austerity. There is an alternative to inequality. There is an alternative to sweetheart trade deals with Donald Trump.’

The GBP/AUD exchange rate has remained subdued today as UK markets continue to absorb the political news ahead of December’s election. With UK political developments remaining in focus today, it is unlikely that the Pound will make any sudden gains on the Australian Dollar.

In UK economic news, today saw the release of September’s UK BRC shop price index figure ease by -0.4%.

Helen Dickinson, the Director at BRC, commented:

‘Consumers continue to benefit from lower shop prices, with October being the fifth consecutive month of decline. Non-food prices have fallen well below the 12-month average, with greater discounting taking place as retailers seek to stimulate additional sales.’

GBP/AUD Outlook: UK Political Developments to Remain in Focus

The UK’s political developments will continue to drive the Pound this week, with uncertainties surrounding December’s general election likely to dominate the spotlight.

Meanwhile, Pound traders will be looking ahead to tomorrow’s release of October’s UK GfK consumer confidence figure, which is expected to ease from -12 to -13.

Australian Dollar investors will be awaiting tomorrow’s publication of the Australian AiG performance of manufacturing index for October. Any signs of improvement could provide some uplift for the AUD/GBP exchange rate.

Tomorrow will also see the release of Australia’s building permits figure for September, which is expected to improve by 0.5%.

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