All eyes are on tomorrow’s Bank of England meeting which takes place around mid-day, as the likelihood of an interest rate hike from the BoE is high.
Some economists have suggested the rate hike has an 80 to 90% chance of occurring, with much of Sterling’s recent gains being priced into the Pound’s value. Tomorrow could be significant for a number of reasons, for example if the hike of 0.25% takes place this will be the highest rate offered in over 10 years.
There are plenty of expectations that the rate hike will happen, and I think that those of our readers with a currency exchange to make involving the Pound should be aware of the following potential outcomes, and how the pound’s value could be impacted.
If the rate hike doesn’t take place I’m expecting to see the Pound lose value, owing to the chances that the rate hike has already been factored in to the current GBP rate.
If the rate hike does take place, but the commentary and forward guidance afterwards is bearish and negative I think the Pound may drop in value, despite the rate hike as the chances of another one in the short term could have slimmed.
If the Bank of England opts to hike rates and then comments that there will be further rate hikes in the short-term future, I would expect to see the Pound climb quite considerably despite the Brexit related headwinds at the moment.
Aside from tomorrow’s decision I also think that the trade talks between the US and China could influence the GBP/AUD exchange rate. The Aussie Dollar has come under pressure after comments from Trump suggested that he will push for higher tariffs. This could negatively impact the Aussie Dollars value which is the reason for the weaker Aussie Dollar.
Those of our readers that wish to plan around tomorrow’s decision and comments from Mark Carney, the Governor of the Bank of England, have plenty of time to get in touch to discuss your plans. For further information on how the above factors are likely to impact GBPAUD rates in the short term feel free to get in touch using [email protected].