Australian Dollar to Pound Sterling Exchange Rate Forecast: AUD/GBP Gains on Downbeat BoE Minutes

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The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate rose during Wednesday’s European trading after Bank of England (BoE) meeting minutes disappointed investors.

The BoE announced that the Monetary Policy Committee (MPC) was unanimous in its decision to hold the benchmark interest rate at 0.50%. Pound Sterling sentiment tumbled as bets for a UK rate hike were postponed yet again.

Last year, BoE Governor Mark Carney gained the reputation of being an ‘unreliable boyfriend’ as he hyped up the possibility of interest rate hikes in the UK.

However, Carney backtracked quite significantly as the months went on and weaker economic data emerged. Increases in borrowing costs were expected to occur either before Christmas or in the first part of 2015; however, as today’s minutes show, the bank may be a long way from changing the benchmark bank rate.

The past four meetings showed two MPC hawks vote in favour of hikes, but this meeting broke the divergence.

The minutes read: ‘In view of all members, the outlook justified maintaining both the current level of Bank Rate and the stock of asset purchases financed by the issuance of central bank reserves. Monetary policy could and would be adjusted at the appropriate time to ensure that CPI inflation was on track to meet the 2% target in the medium term.’

UK Unemployment Falls but Offers Pound Sterling to Australian Dollar (GBP/AUD) Little Support

However, UK employment figures noted an improvement in the labour market—an event that would usually offer Sterling support.

The UK created 37K new jobs in the three months through November, less than the 74K forecast. Even though the economy created fewer jobs than expected, Jobless Claims Change recorded a -29.7K drop in benefit seekers. The favourable figures allowed the Unemployment Rate to edge past the 5.9% forecast to 5.8% from the previous 6.0%.

Meanwhile, the Australian Dollar was offered a little support when the Westpac Consumer Confidence Index showed a slight rebound in January after a tumble in December. The index reached 93.2 in January down from 91.1 in December.

Australian Dollar to Pound Sterling (AUD/GBP) Exchange Rate Forecast

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate could be in for a rocky ride in coming months after Westpac announced it still forecasts Reserve Bank of Australia (RBA) rate cuts in February.

The RBA has previously denied that it has considered slashing rates, yet economists are suggesting that the central bank will need to in order to help growth.

Thursday will see the release of Australian Consumer Inflation figures as well New Home Sales stats which could have a moderate effect on the Australian Dollar exchange rate.

However, Bank of England officials are expected to speak on Thursday and could influence Pound Sterling trading.

The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is trending in the region of 0.5431. The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate hovers at 1.8422.

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