{"id":3768,"date":"2017-06-22T00:00:00","date_gmt":"2017-06-22T04:00:00","guid":{"rendered":"https:\/\/currencylive.com\/100128-gbp-aud-boe-haldane-comments\/"},"modified":"2017-06-22T00:00:00","modified_gmt":"2017-06-22T04:00:00","slug":"100128-gbp-aud-boe-haldane-comments","status":"publish","type":"post","link":"https:\/\/currencylive.com\/news\/100128-gbp-aud-boe-haldane-comments\/","title":{"rendered":"Pound Rallies Versus Australian Dollar on BoE Surprise Comments"},"content":{"rendered":"<p>The Australian dollar came under pressure against its peers on Wednesday, but particularly versus the pound. The GBP\/AUD dropped 0.7% over the course of the day to A$1.6770 after comments from the Bank of England (BoE) led investors to believe interest rates could be going up in the UK before the end of the year.<\/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>The pound rallied over 100 points versus the Australian dollar after Chief Economist and voting Monetary Policy Committee (MPC) member, Andy Haldane, made surprising comments. Haldane offered an optimic view of an interest rate hike before the end of year.<\/p>\n<p>This suggestion caught the market off guard for several reasons. Firstly, Haldane is usually considered one of the more conservative members, so the market would not expect him to switch alliances and vote to hike rates. Secondly, for the last four years his voting choice has coincided with that of BoE Governor Mark Carney. Only yesterday Carney stated he didn\u2019t believe now was a good time to raise rates, so the deviation of Haldane is even more conspicuous.<\/p>\n<p>Investors are growing in confidence that a UK interest rate rise may be around the corner. The expectation of a rate hike increased from 20% to 44%. When interest rate expectations increase, usually so does the value of the currency.<\/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<h2><a href=\"#another-quiet-day-for-the-aussie-eyes-towards-iron-ore-prices\" name=\"another-quiet-day-for-the-aussie-eyes-towards-iron-ore-prices\"><\/a>Another quiet day for the Aussie, eyes towards iron ore prices<\/h2>\n<p>The Australian dollar started Wednesday off on the right foot. However, it was still unable to recover the ground it lost following Haldane\u2019s speech.<\/p>\n<p>Whether or not the Australian dollar sees a repeat of today\u2019s selling pressure against the pound will largely depend on UK political jitters. Sentiment in general will also play a role given that there are no market moving events scheduled into the economic calendar for either the Australian dollar or the pound. In fact, high impacting economic events for the Australian dollar are scarce until next week.<\/p>\n<p>In the absence of Australian macro data, investors could switch their focus back to the commodity market and, particularly, iron ore. Iron ore has been selling off since late March, but interestingly the last six sessions have seen gains, which could spark some optimism back into the Australian dollar.<\/p>\n<table class=\"table table-bordered\">\n<thead>\n<tr>\n<th>Why does the price of iron ore impact the Australian dollar? <\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>The reason behind this is because commodities, particularly iron ore, make up the bulk of Australian exports. Ultimately, Australian iron ore needs to be purchased using Australian dollars. So, if the demand or expected demand for iron ore increases, then demand for the Australian dollar also increases. As the demand for the Australian dollar goes up, so does its value. <\/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 Australian dollar came under pressure against its peers on Wednesday, but particularly versus the pound. The GBP\/AUD dropped 0.7% over the course of the day to A$1.6770 after comments from the Bank of England (BoE) led investors to believe interest rates could be going up in the UK before the end of the year. [&hellip;]<\/p>\n","protected":false},"author":163946597,"featured_media":3769,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1379],"tags":[1394],"class_list":{"0":"post-3768","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 Rallies Versus Australian Dollar on BoE Surprise Comments - 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\/100128-gbp-aud-boe-haldane-comments\/\" \/>\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\\\/100128-gbp-aud-boe-haldane-comments\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100128-gbp-aud-boe-haldane-comments\\\/\"},\"author\":{\"name\":\"Fiona Cincotta\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#\\\/schema\\\/person\\\/8ef0fafb6c93f1204150bb907b42cfec\"},\"headline\":\"Pound Rallies Versus Australian Dollar on BoE Surprise Comments\",\"datePublished\":\"2017-06-22T04:00:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100128-gbp-aud-boe-haldane-comments\\\/\"},\"wordCount\":819,\"image\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100128-gbp-aud-boe-haldane-comments\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/currencylive.com\\\/news\\\/wp-content\\\/uploads\\\/2019\\\/08\\\/100128-gbp-aud-boe-haldane-comments.jpg\",\"keywords\":[\"gbp\"],\"articleSection\":[\"GBP\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2017\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100128-gbp-aud-boe-haldane-comments\\\/\",\"url\":\"https:\\\/\\\/currencylive.com\\\/news\\\/100128-gbp-aud-boe-haldane-comments\\\/\",\"name\":\"Pound Rallies Versus Australian Dollar on BoE Surprise Comments - 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