Apprehensive words from the RBA kept the aussie on the back foot in trading yesterday

The pound climbed back over 1.82 against the aussie after a statement from the RBA dulled the possibility of a rate rise in December.

  • In their rate statement early Tuesday morning, the Reserve Bank of Australia, though they did raise the base rate to 3.50%, sounded a more dovish tone than many expected.
  • In response investors pared back expectations of a further rate rise next month after Glenn Stevens, RBA governor, said higher rates would come “gradually” and that the rise in the Australian dollar, which has gained 27% against the dollar so far this year, might hurt exports and economic growth.
  • In addition, the announcement of the UK banking shake-up added to the negative sentiment towards the pound, underscoring the potential problems ahead for the economy and its troubled financial sector.
  • In trading this morning, the pound is marginally down although an unexpected fall in Australia’s September retail sales has added to doubts about a further near-term rate rise, slowing the aussie’s gains.