GBP AUD Lower Ahead of RBA Meeting Minutes

GBP AUD Lower Ahead of RBA Meeting Minutes

The GBP AUD exchange rate was -0.26% lower ahead of the latest RBA meeting minutes. The Aussie dollar was supported despite the pound sterling faring well against other major currencies. The fears over a return to Brexit-related crisis for the pound receded but the Australian dollar is still in charge.

The GBP AUD exchange rate was trading at 1.8250 ahead of the latest comments from the Reserve Bank.

Reserve bank takes the stage for Aussie dollar direction

Tuesday sees the release of the latest RBA meeting minutes, accompanied by a speech from the governor, Philip Lowe.

Traders will be looking for any new insight on the potential for an earlier rate hike than the bank previously planned. The Australian dollar rallied recently with the reopening in its major cities, and it was also helped by a repricing of bonds after the RBA surrendered its control of the 0.1% rate in the open market.

The RBA had tried to pin down rates at the bank’s 0.1% rate in the market for 2024 bonds due to rising inflation. Governor Lowe has continued to take a dovish tone on rates and may not bring the surprise that traders are hoping for.

The Aussie dollar was also supported by Chinese data on Monday with Industrial Production rising at a YoY pace of 3.5% in October, higher than economist forecasts for 3.0%, while Retail Sales also rose at a pace of 4.9% YoY, above economist forecasts for 3.7%.

Some analysts raised concerns that the retail sales data was helped by higher food sales as consumers get in ahead of potential winter lockdowns. Other analysts pointed to the Chinese Real Estate Investment data, which showed investment coming in at 6.1%, lower than expectations for 6.2%. Societe Generale said that “for our economists, it doesn’t change the view that a property-led slowdown will continue over the coming months and more broad-based easing is still warranted”.

British pound supported by further Article 16 talks

The pound sterling will be helped by recent comments by the Prime Minister and his spokesperson.

On the spread of coronavirus in Europe, which has seen a partial lockdown in the likes of Belgium, the PM said he saw “nothing in the data at the moment” that would force the government to move to “Plan B” of its contingency planning for winter.

The Prime Minister’s spokesperson also raised hopes that further talks over the Northern Ireland protocol will avert the triggering of a Brexit clause and possible EU retaliation.

“There are significant gaps between our positions. But again, we are going to be continuing talks, intensified talks, between the two teams to try and find a consensual solution. I wouldn’t say seek to put a time limit on it. I think the most important thing is to not place a time limit on it which could hinder potential progress,” Boris Johnson’s spokesperson said.

Today also sees the release of UK employment data ahead of Wednesday’s inflation rate, so it will be an important week for the GBP v AUD.

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