Pound to Australian Dollar (GBP/AUD) Exchange Rate News: Sterling Lower as UK Inflation Disappoints

Pound to Australian Dollar Exchange Rate (GBP/AUD) Sheds Recovery Attempt on UK Inflation Results

Wednesday morning saw the publication of Britain’s May Consumer Price Index (CPI) results, which disappointed investors.

Rather than showing UK inflation climbing to 2.5% year-on-year as forecast, the yearly figure remained at 2.4%.

As a result, the Pound to Australian Dollar (GBP/AUD) exchange rate slipped and trended in the interbank region of 1.75 at the time of writing.

GBP/AUD Exchange Rate Tumbles on Weaker-than-Expected UK Inflation Figures

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is sliding this morning following some lacklustre inflation data from the UK.

At the time of writing the GBP/AUD exchange rate has fallen over 0.4%, having retreated over half a cent from the high struck on Tuesday.

Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Plummets as UK Inflation Misses

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate is back on the defensive this morning as the pairing tumbles in the wake of some disappointing CPI figures from the UK.

Data published by the Office for National Statistics (ONS) revealed the UK’s inflation rate held at a one-year low of 2.4% in May, falling short of forecasts that price growth would creep up to 2.5%.

This subdued reading came despite fuel prices striking their highest levels since 2014 last month, when Brent Crude broke past $80 a barrel, but with this rise being offset by falling prices for computer games and energy, as well as food and drink.

While consumers are likely to welcome the recent drop in inflation, it comes as a blow to GBP investors as it reduces the chances of the Bank of England (BoE) raising interest rates later this year.

Australian Dollar (AUD) Exchange Rate Pressured by Fed Speculation

Meanwhile Australian Dollar (AUD) gains have been trimmed somewhat this morning as demand for the high-yield currency is curbed by US Dollar (USD) strength, ahead of an expected rate hike from the Federal Reserve later this evening.

If the prospect of a rate hike wasn’t enough, risk appetite has been further clipped by speculation the Fed could be gearing up to accelerating the pace of its monetary tightening.

This follows a report from the Wall Street Journal, which suggests Fed Chair, Jerome Powell, is planning to mix things up by holding a press conference after every policy meeting, instead of every other meeting as is the norm.

With the Fed currently only raising rates at meetings with an accompanying press conference, the change would theoretically mean that every Fed meeting could be ‘live’ for rate increases, the prospect of which has greatly dented the appeal of the ‘Aussie’

GBP/AUD Exchange Rate Forecast: Will Drop in Unemployment Help to Bolster the ‘Aussie’?

Looking ahead the GBP/AUD exchange rate may fall back overnight on Wednesday, as Australia publishes its latest employment figures.

Analysts currently forecast that another strong lift in employment in May will see Australia’s unemployment rate slide from 5.6% to 5.5%, potentially bolstering the appeal of the Australian Dollar (AUD)

However any gains in the ‘Aussie’ may prove to be limited, if investors continue to raise concerns about anaemic wage growth, which has failed to pick up despite falling unemployment.

Meanwhile any losses in the Pound (GBP) exchange rate on Thursday could be extended by the publication of the UK’s latest retail sales figures, with economists predicting that sales growth will have slowed last month after rocketing higher in April.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail