Bank of England Minutes Announced
This morning the latest set of Bank of England (BoE) minutes have been announced and as expected the central bank voted unanimously to keep both interest rates on hold at 0.5% and also to keep the Quantitative Easing (QE) programme at the current level of £375 billion. This has resulted in some Sterling weakness with Sterling Euro now heading down back towards the 1.21 mark which may be the start of a downward trend for GBP EUR. Despite this news being expected the markets may have priced in a very outside chance of the QE programme being reduced or even just a discussion taking place about reducing the QE programme but as this does not appear to have really happened the rates have dropped slightly. With so much positive economic data for the UK it seems that the chances of the QE programme being reduced is increasing as is the possibility of interest rates being hiked in the near future but the BoE seem to be keeping things on hold in order to avoid upsetting the current recovery. While this may seem like a sensible optoion the longer this goes on for the more the pressure will increase on the Bank to make some changes to ensure the recovery moves on to another level and so over the summer months and moving into Autumn I would expect the markets will start to watch these BoE announcements more closely and more emphasis is likely to be placed on them potentially meaning they will have an even bigger impact on Sterling exchange rates.
AUD Exchange Rates
Early this morning Australian inflation figures were announced and came out much worse than expected at 2.9% which was a big drop from the expected 3.2% and as a result the Australian Dollar has weakened presenting some excellent opportunities to buy Australian Dollars. At the time of writing the AUD exchange rates are sitting over the 1.81 mark which, considering the rates were down below 1.80 recently is a vast improvement. This inflation news has also removed some of the pressure from the Reserve Bank of Australia (RBA) to increase interest rates and also the fact the AUD has weakened is good news for the Australian export market which the RBA are likely to be very pleased with.