The AUD has seen a continual steady decrease in value against the GBP since late last week and the recent trend has continued over the past 24 hours. The Pound gained considerable ground on the Aussie prior to last weekend when the Bank of England Governor Mark Carney indicated that the BoE are even closer to raising interest rates. This event was essentially the catalyst for the Pounds’ recent rally against the Aussie.
The Reserve Bank of Australia released the Minutes of their June Policy Meeting yesterday and the market reacted to the dovish tone through a sell-off of the AUD. The RBA noted that the current AUD exchange rate has “remained high by historical standards” despite “the further decline in commodity prices over the past month”. The contents of the Minutes indicated that rates will remain on hold for the meantime as the economy digests the impact of the federal budget and expected decline in the mining sector.
A key economic indicator was released out of the UK last night in the form of the inflation figures. The monthly and annualised CPI figures were expected to be 0.2% and 1.7% respectively, a reduction from the previous month’s figures. The result was actually a miss with printed figures being -0.1% month on month and 1.5% year-on-year. Although the result was not as expected, the Pound still held the recent ground it took from the Aussie throughout the day yesterday.
The combination of these key recent events has certainly caused a shift in the market, favouring the Pound momentum at this current moment. Economic attention will now be concentrated on the Bank of England Minutes that will be released this evening. Any further mention of a rate rise by the BoE is likely to impact the AUD to GBP currency pairing through strengthening the Pound. Tomorrow evening the UK will report on Retail Sales which is the final significant market mover for this week in relation to the AUD to GBP.