GBP/AUD Exchange Rate Rises as Markets Expect RBA Rate Cut by May

Pound Australian Dollar (GBP/AUD) Exchange Rate Rallies as CPI Remains Unchanged

UPDATE: The Pound Sterling Australian Dollar (GBP/AUD) exchange rate rallied today, and the pairing is currently trading at an inter-bank rate of AU$1.8359.

On Wednesday, the Australian Consumer Price Index (CPI) was left unchanged in the three months leading to March, and rose annually by just 1.3%.

Further data revealed that underlying CPI rose by just 1.42%, the equal lowest rate of growth on record.

With the Reserve Bank of Australia’s (RBA) medium underlying inflation target at between 2% and 3%, inflation is moving further away from this target.

Markets now see a two-in-three chance for 25 basis point rate cut next month and a full cut by July, which likely dampened sentiment in the ‘Aussie’.

Pound Australian Dollar (GBP/AUD) Exchange Rate Rises as PM Faces Fresh Wave of No-Confidence

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate rose this morning, and the pairing is currently trading at an inter-bank rate of AU$1.8262.

Cross-party Brexit talks between the Conservatives and Labour are set to continue today as MPs return from their Easter break.

Nevertheless, the Prime Minister could be facing further problems as it has been reported that the Chair of the 1922 Committee Sir Graham Brady has urged Theresa May to name a departure date.

If she refuses, Conservative MPs could push for a rule change meaning that another vote of no-confidence could be scheduled before December 2019.

However, Prisons Minister Rory Stewart said that the Prime Minister was doing a ‘good job’, and commented:

‘The idea somehow that some new fresh leader with extraordinary charm and nimble feet would be able to suddenly get the deal across the line is mistaken.

‘It’s nothing to do with the individual, it’s that people disagree deeply about Brexit.’

Australian Dollar (AUD) Exchange Rates Dip despite Iron Ore Rising to Multi-Year Highs

On Tuesday, the Australian Dollar (AUD) eased, falling against the Pound (GBP) as the currency failed to benefit from the strength in iron ore prices.

On Monday, the iron ore spot and futures markets rose, reversing declines seen over the last week.

Iron ore prices were at or just below multi-year highs as a surge in Chinese steel futures provided support.

However, the ‘Aussie’ failed to benefit from this, falling against Sterling.

Stabilising Home Prices Fail to Buoy Australian Dollar (AUD)

Meanwhile, data from CoreLogic revealed that home prices across Australia’s mainland state capitals stopped falling last week.

This adds to further indicators that the housing market may be starting to stabilise.

While one week does not make a trend, the price stabilisation in Sydney and Melbourne is noteworthy.

However, the Australian Dollar fell against the Pound nevertheless.

Pound Australian Dollar Outlook: Will the GBP/AUD Exchange Rate Rise on Disappointing Aussie CPI?

Looking ahead to Wednesday, the Australian Dollar (AUD) could slip further against the Pound (GBP) following the release of the Australian Consumer Price Index (CPI).

If Q1 CPI rises by a lower-than-forecast figure, it could dampen sentiment in the ‘Aussie’.

It is likely that any further developments in breaking the Brexit deadlock will cause movement in Sterling.

If cross-party talks prove successful the Pound Australian Dollar (GBP/AUD) exchange rate could continue to rise.


Millie Empson

Contact Millie Empson