GBP/EUR, GBP/AUD Exchange Rates in Tight Range Ahead of BoE Interest Rate Decision08 February 2018 by News Desk
The pound to euro (GBP/AUD) and pound to Australian dollar (GBP/AUD) exchange rates may have a few reasons to move this week as the BoE and RBA monetary policy statements approach, say industry experts FC Exchange.
The pound has softened in recent sessions as Brexit continues to weigh and market volatility heightens. Additionally, sterling is softer ahead of the Bank of England’s (BoE) interest rate decision. It’s possible a few policymakers will vote to increase interest rates; Michael Saunders and Ian McCafferty are historically the most hawkish members of the Monetary Policy Committee (MPC).
Many investors are expecting the central bank to revise rates higher to 0.75% at some point in the near future as the UK economy is coping well enough to withstand higher rates. If more than a few members vote in favour of higher rates there could be some significant movement for the pound. BoE Governor Mark Carney is expected to speak afterwards and his comments on the economy will be closely scrutinised.
Meanwhile, in the Eurozone, data showed Germany’s trade balance contracted in 2017 for the first time since 2009. The data indicated that improving domestic demand is creating the need for more imports. Dekabank representative Andreas Scheuerle commented: ‘The improvement of the trade balance is driven by imports and not by exports. This means we don’t have to put on the brakes on exports. This is a win-win situation.’
In the past, there have been calls for German authorities to improve domestic spending by Donald Trump and Chief of the International Monetary Fund Christine Lagarde. Lagarde has stated previously that considerable surpluses in countries like Germany have held some responsibility for a surge in protectionism in other places.
Meanwhile, the Australian dollar has also experienced some weakness as global commodity markets softened and the US dollar rebounded. Friday will see the release of Australian home loans and the Reserve Bank of Australia’s (RBA) monetary policy statement come to light which might give the Aussie dollar some direction.
The pound to euro exchange rate is currently trending in the region of 1.1220, reaching session highs of 1.1333 and lows of 1.1308 so far. The pound to Australian dollar (GBP/AUD) exchange rate is trending in the region of 1.7775.
Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.
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