{"id":3728,"date":"2017-06-15T00:00:00","date_gmt":"2017-06-15T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100108-gbp-aud-boe-rate-decision\/"},"modified":"2017-06-15T00:00:00","modified_gmt":"2017-06-15T04:00:00","slug":"100108-gbp-aud-boe-rate-decision","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100108-gbp-aud-boe-rate-decision\/","title":{"rendered":"Pound Dives Versus Australian Dollar Ahead of BoE Rate Decision"},"content":{"rendered":"<p>The pound Australian dollar exchange rate tumbled 1% on pound weakness as fears over the state of the UK economy in addition to political uncertainty weighed on trade. The exchange rate is approaching the A$1.6729 low hit in the wake of the UK general election results, where the UK Conservatives failed to increase their majority in Parliament.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>What do these figures mean? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute. <\/p>\n<p> For example, it could be written: <em>1 GBP = 1.72119 AUD<\/em> <\/p>\n<p> <em>Here, \u00a31 is equivalent to approximately A$1.72. This specifically measures the pound\u2019s worth against the Australian dollar. If the Aussie dollar amount increases in this pairing, it\u2019s positive for the pound.<\/em> <\/p>\n<p> Or, if you were looking at it the other way around: <em>1 AUD = 0.57677 GBP<\/em> <\/p>\n<p> <em>In this example, A$1 is equivalent to approximately \u00a30.58. This measures the Australian dollar\u2019s worth versus the British pound. If the sterling number gets larger, it\u2019s good news for the Aussie dollar.<\/em> <\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>Against a backdrop of an unstable political environment in the UK, investors are working themselves through a busy week as far as economic data releases are concerned. On Wednesday, there was more bad news for the UK consumer after wage growth fell to 2.1%, which was worse than analysts predicted. That makes it average earnings\u2019 lowest level in the UK since late 2014. Given that inflation soared to 2.9% in May, that means wages in real terms (i.e adjusted for inflation) are actually falling. And falling faster than analysts had expected. As the cost of living increases, consumers are finding an intensifying squeeze on their paychecks. This could cause households to hold back on spending, which is bad news for the economy. Britain\u2019s economy is heavily reliant on the service sector, which requires consumers to spend. When concerns emerge over an economy\u2019s health, the currency will fall. Which it what is happening to the pound.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why does poor economic data drag on a country\u2019s currency? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Weak economic indicators point to a slowing economy. Weak economies have weaker currencies because institutions look to reduce investments in countries where growth prospects are low and then transfer money to countries with higher growth prospects. These institutions sell out of their investment and the local currency, thus increasing supply of the currency and pushing down the money\u2019s worth. So, when a country or region has poor economic news, the value of the currency tends to fall. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<p>Today\u2019s release of retail sales figures will provide evidence as to whether households are reining back on spending. Up to now, retail sales have remained fairly resilient with the UK consumer continuing to spend. However, given the extent of the squeeze on households, a drop in retail sales could be on the cards. Should retail sales growth come in lower than the 1.7% expected, the pound could continue to crumble versus the Australian dollar.<\/p>\n<p>Finally, the Bank of England (BoE) will also be enlightening the market with an interest rate decision today. The rate is expected to stay on hold at 0.25%. Investors will be listening carefully to BoE Governor, Mark Carney, for any clues as to when interest rates may rise. Inflation is well above the BoE target of 2%. However, given the huge squeeze the consumers are experiencing on top of the already uncertain atmosphere created by a hung UK parliament, rates could stay on hold for quite some time. Confirmation of this by Mark Carney could also bring interest rate expectations lower, which would weigh on the value of the pound.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why do raised interest rates boost a currency\u2019s value? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Interest rates are key to understanding exchange rate movements. Those who have large sums of money to invest want the highest return on their investments. Higher interest rate environments tend to offer higher yields. So, if the interest rate or at least the interest rate expectation of a country is relatively higher compared to another, then it attracts more foreign capital investment. Large corporations and investors need local currency to invest. More local currency used then boosts the demand of that currency, pushing the value higher. <\/td>\n<\/tr>\n<\/tbody>\n<\/table class=\"table table-bordered\">\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td>\n<p><small><em><br \/>\nThis publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Inc., Currency Live or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. Consult our <a href=\"https:\/\/currencylive.com\/risk-warning\/\">risk warning<\/a> page for more details.<\/em><\/small><\/p>\n<p><small><em>This article was initially published on TransferWise.com from the same author. The content at Currency Live is the sole opinion of the authors and in no way reflects the views of TransferWise Inc.<\/em><\/small><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The pound Australian dollar exchange rate tumbled 1% on pound weakness as fears over the state of the UK economy in addition to political uncertainty weighed on trade. The exchange rate is approaching the A$1.6729 low hit in the wake of the UK general election results, where the UK Conservatives failed to increase their majority [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":3729,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379],"tags":[1394],"class_list":{"0":"post-3728","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-gbp","8":"tag-gbp"},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Pound Dives Versus Australian Dollar Ahead of BoE Rate Decision - Currency Live<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/currencylive.com\/news\/100108-gbp-aud-boe-rate-decision\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Fiona Cincotta\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100108-gbp-aud-boe-rate-decision\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100108-gbp-aud-boe-rate-decision\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"Pound Dives Versus Australian Dollar Ahead of BoE Rate Decision\",\"datePublished\":\"2017-06-15T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100108-gbp-aud-boe-rate-decision\\\/\"},\"wordCount\":867,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100108-gbp-aud-boe-rate-decision\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100108-gbp-aud-boe-rate-decision.jpg\",\"keywords\":[\"gbp\"],\"articleSection\":[\"GBP\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2017\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100108-gbp-aud-boe-rate-decision\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100108-gbp-aud-boe-rate-decision\\\/\",\"name\":\"Pound Dives Versus Australian Dollar Ahead of BoE Rate Decision - 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