GBP/USD: Traders Cautious Ahead of BoE Rate Decision
  • Pound (GBP) surges after Andrew Bailey rows back on negative interest rates
  • Lockdown restrictions could cap gains
  • Australian Dollar (AUD) under pressure following RBA Deputy Governor’s speech
  • PMI data & retail sales in focus

The Pound Australian Dollar (GBP/AUD) exchange rate is trading higher reversing earlier losses. The pair opened at 1.7732 before slipping to a daily low of 1.7696 and rebounding higher. At 08:30 UTC, GBPAUD trades +0.3% at 1.7784, slightly off the high of the day at 1.7826.

He Pound has rebounded higher after Bank of England Governor Andrew Bailey, played down the prospects of negative interest rates when he spoke today. Following the central bank’s monetary policy meeting last week, the markets were under the impression that the BoE were moving relatively quickly towards implementing negative interest rates. Today, Andrew Bailey reset expectations and that is providing a lift for sterling.

Any gains in the Pound, however, will be capped as concerns over a second wave of coronavirus plague investors. Boris Johnson is due to announce a 10pm curfew for pubs, bars, restaurants and hospitality venues in a bid to stem the spread of coronavirus.

The announcement will come after the chief medical advisor warned that the UK could be soaring towards 50,000 new daily cases and 200 daily deaths in the coming weeks if action wasn’t taken.

Investors will now await Boris Johnson for any hints of further tightening restrictions.

The Australian Dollar is trading broadly lower following a speech by Reserve Bank of Australia’s Deputy Governor Guy Debelle, in which he touched on the value of the Australian Dollar and negative interest rates.

The comments from Debelle that “a lower exchange rate would definitely be beneficial for the Australian economy” were a little surprising given that the RBA have not previously expressed concerns over the value of the Aussie Dollar.

Looking  ahead, Australian investors will focus on the release of manufacturing and service sector PMI data and retail sales for further clues over the health of the economic recovery.