GBP AUD Forecast: Pound to Australian Dollar Exchange Rate Dips on UK GDP Downgrade

Pessimistic UK Growth Forecast Drags GBP/AUD Exchange Rate Down

The Pound (GBP) has made a minor decline against the Australian Dollar (AUD) today, following a gloomy GDP forecast.

The National Institute of Economic and Social Research (NIESR) has cut its 2018 UK growth forecast to under 1.5%, devaluing the Pound.

NIESR analysts believe this may only be a temporary slowdown, but the outlook has still rattled GBP traders before next week’s Bank of England (BoE) interest rate decision.

Uncertainty about Upcoming BoE Meeting Leaves GBP/AUD Exchange Rate Steady

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate remains close to the week’s lows due to concerns about the future path of interest rates.

The Bank of England (BoE) will be making its interest rate decision for May next week, but recent UK data has significantly lowered expectations for a rate hike from policymakers.

GBP/AUD Exchange Rate Steady despite Annual Rise in New Car Sales

The latest UK economic data has failed to shift the GBP/AUD exchange rate; new car sales have risen in April 2018, but only when compared to a major slump in April 2017.

Analysts at the Society of Motor Manufacturers and Traders (SMMT) have warned that;

‘The overall new car market remains down year to date.

‘Political and economic uncertainty will continue to affect the market and further instability could cause additional disruption’.

RBA Policy Statement Fails to Shift Australian Dollar to Pound (AUD/GBP) Exchange Rate

A relatively cautious statement from the Reserve Bank of Australia (RBA) has left the Australian Dollar (AUD) trading tightly against the Pound (GBP) today.

The RBA’s monetary policy statement suggested that an interest rate hike was likely, but this was dependent on inflation hitting the central bank’s 2% target.

The minutes suggested slow and steady Australian economic growth, which has done little to impress AUD traders hoping for higher interest rates in 2018.

Pound to Australian Dollar Forecast: Can GBP/AUD Exchange Rate Recover on BoE Interest Rate Hike?

BoE policymakers will meeting to consider whether higher interest rates are necessary or viable, given the recent inflation rate slowdown and string of poor UK data releases.

Some economists believe there is less than a 10% chance of a BoE interest rate hike next week, which makes another rate freeze a distinct possibility.

If BoE officials defy this pessimism and hike interest rates regardless, the Pound (GBP) could rally against the Australian Dollar (AUD) and regain lost ground in the pairing.

Will Australian Dollar to Pound (AUD/GBP) Exchange Rate Rise on Higher Business Confidence?

Next week’s Australian economic data will include a construction activity measure and business confidence reading on 7th May.

The Australian Dollar could be boosted by the stats, as while April’s construction output is forecast to have fallen, business confidence is predicted to have risen.

Later in the week, the AUD could also be affected by Westpac’s consumer confidence measurement for May.

Out on the 10th, this reading might push the Australian Dollar up against the Pound if it shows the forecast 0.4% rise in consumer confidence levels.

Hannah Wilson

Contact Hannah Wilson