The Bank of England chose to hold rates at 0.5% last night which gave the AUD some much needed Buoyancy against the GBP
Going into last night the BoE was expected to leave Interest rates unchanged. This was because of a number of reasons; including stagnant growth, low inflation and the fact that only a minority of BoE chairmen supported a rate rise.
Howard Archer, chief UK & European economist at IHS Global Insight, said it the he was not surprised that the rate stays on 0.5%;
“Indeed, it would now be a surprise if the Bank of England raised interest rates until well into 2015,” he said.
“The likelihood of a near-term interest rate hike from the Bank of England has seemingly receded substantially recently.”
As mentioned above, weak inflation, slow wage growth, and troubles in the Europe have prompted some Bank officials to indicate that rates will not rise anytime soon.
The AUD is trading stronger against the GBP this morning as yesterday’s employment figures did better the general expectations. The figures came out at 24,100 additional jobs added to the Australian economy and the unemployment rate remained on 6.2%.
The AUD should remain steady until the weekend; Chinese Trade balance figures will be released over the weekend and are also expected to be significantly positive. Come open of market Monday morning we may see a stronger AUD; depending on the trade balance figures.