Yesterday saw the announcement of the Bank of England’s interest rate decision. The decision saw the UK’s interest rate remain steady at 0.75%. This caused an influx of confidence back into the GBP, which saw the currency soar. This also meant that GBP regained its progression over the Australian dollar, which had been previously faltered after the BoE rate cut bet jitters. Investors were concerned that the BoE would fall victim to a rate cut which would have reduced the strength of GBP. Thankfully for GBP, the BoE overruled the chance of a rate cut bet by remaining firm, instilling confidence back into the British currency.
GBP/AUD Exchange Rate Soars After Bank of England Holds Interest Rate
The pound to Australian dollar (GBP/AUD) exchange rate rose by 1% today, with the pairing trading at around $1.947 after the Bank of England held its interest rates at 0.75%. With this decision, the odds of the central bank making any cuts in the upcoming months were greatly reduced, which boosted market confidence in the currency. In the BoE meeting minutes it was noted that since December’s meeting, international developments have been positive and the most recent UK data supported the forecast of a near-term recovery in growth. Furthermore, the minutes went on to suggest that the Committee would closely monitor the extent to which these early indications of an improve outlook were sustained and followed through to the hard data on domestic activity in the upcoming months.
The BoE’s forecast also assumed that an orderly, new free-trade agreement would be in place with the EU, this is something which has buoyed the pound as the UK is set to leave the EU later today. The announcement was met with a sigh of relief for many as the odds of a rate cut were sitting at around 50% before the meeting and the GBP has certainly benefitted from the steadied confidence in the UK’s economic outlook.
GBP/AUD Exchange Rate Sinks Amidst Lowered Market Risk Appetite
Meanwhile, the Australian dollar’s exchange rates continued to be threatened by the coronavirus outbreak which has significantly reduced the market’s risk appetite. As a risk-sensitive currency, AUD has suffered as a result as investors flock to safe-haven currencies like the USD.
If you’re considering buying or selling Australian dollars and would like to compare rates or know more about the factors that could impact your exchange rate, feel free to contact me directly, I look forward to hearing from you.