GBP/AUD Outlook: Pound Australian Dollar Exchange Rate Edges Higher on Bullish Bank of England Comments

March 15, 2021 – Written by John Cameron

GBP/AUD Exchange Rate Rises as BoE Governor is ‘More Positive’ About UK Economic Outlook

The Pound Australian Dollar (GBP/AUD) rose today following upbeat comments from the Bank of England’s (BoE) Governor Andrew Bailey, who said that he was now ‘more positive’ about the outlook for the UK economy. The pairing is currently trading around AU$ 1.79.

Mr. Bailey said:

‘I’m now more positive, but with a large dose of caution.’

‘The economic effects of the restrictions appear over time to be reducing.’

As a result, GBP investors are becoming more confident about the outlook for the British economy, especially now that coronavirus infection rates are showing a consistent downward trend.

Today saw daily Covid-19 cases fall by -559 compared to last week, while those in hospital are presently reported to be 8,029 – down by -2,896 against the previous week.

Currently, 36.2% of the UK population have been vaccinated against the virus, buoying confidence in the UK’s cautious reopening in the months ahead.

Sunday also saw UK Covid-19 deaths fall to their lowest levels since October 2020.

Australian Dollar (AUD) Dips as Demand for US Dollar Weighs on Risk Sensitive ‘Aussie’

The Australian Dollar (AUD) dipped against Sterling today largely owing to renewed strength in the US Dollar.

Instead, investors are beginning to turn to safe-haven currencies like US Dollar as the outlook for the global economy falters on growing fears over increasing Covid-19 infections in Europe.

A mixture of souring risk-sentiment and an improved outlook for the US economy has driven demand for the US Dollar, overriding demand for the risk-sensitive Australian Dollar.

In Australian economic data, today saw the release of February’s HIA New Home Sales report, which beat forecasts and rose by 22.9%.

As a result, AUD investors are becoming more confident in Australia’s economy as economic data continues to point to a marked improvement in activity.

However, Australia-China relations are weighing on confidence in AUD.

If tensions between China – the world’s second-largest economy – and Australia continue to deteriorate, then we could see the AUD/GBP fall over the coming weeks.

GBP/AUD Exchange Rate Forecast: Could a Dovish Reserve Bank of Australia Drag Down the ‘Aussie’?

Australian Dollar (AUD) investors will be looking ahead to the Reserve Bank of Australia’s (RBA) Meeting Minutes.

Any dovishness about the outlook for Australia’s economy, however, would be AUD-negative.

Tomorrow will also see the release of the latest Australian Westpac Leading Index data for February.

If this shows a marked improvement, then the AUD/GBP exchange rate could begin to head higher.

Risk sentiment will also remain an influential factor on the AUD/GBP exchange rate this week. If Covid-19 cases continue to rise in Europe, however, demand for the risk-sensitive ‘Aussie’ would fall.

The GBP/AUD exchange rate will likely continue to head higher this week if the outlook for the UK economy remains positive.

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