The Pound to Australian Dollar (GBP/AUD) exchange rate found limited traction in the wake of the Reserve Bank of Australia’s (RBA) December policy announcement. Demand for the Australian Dollar (AUD) generally weakened even as policymakers left interest rates on hold at 0.1% as widely expected.
With the RBA signalling that interest rates are unlikely to see any increase until 2024 investors saw limited reason to favour the antipodean currency. As the central bank also maintained its quantitative easing measures this put additional pressure on AUD exchange rates, with monetary policy looking set to remain loose for some time to come. A better-than-expected month of building permits growth was not enough to give the Australian Dollar any boost against its rivals, meanwhile.
A slight upward revision to November’s UK manufacturing PMI offered little in the way of support to Pound Sterling (GBP), on the other hand. As the impact of the initial surge in the manufacturing PMI had already largely been priced into GBP exchange rates this left little room for further gains.
The prospect of another wave of UK job losses in the face of the likely collapse of another major high street brand also put a significant dampener on the Pound.
Even so, the GBP/AUD exchange rate may still find a rallying point in the days ahead if the finalised UK services PMI sees an upgrade.