The Pound to Australian Dollar exchange rate was subdued today as the Pound couldn’t manage to hold on to any meaningful gains.
The pairing is currently trending at around $1.7677.
Pound (GBP) Supported by Vaccine Rollout
The Pound was supported today as the UK’s Consumer Price Index (CPI) for December was released.
The data, beating forecasts and rising 0.3% to 0.6% provided a relief, with investors and analysts hoping that the increase means that the economy could rally in the coming months.
Deputy National Statistician Jonathan Athow at the Office of National Statistics (ONS) spoke on the release:
‘Clothing prices put upward pressure on inflation in December, despite some evidence of continued discounting. Transport costs, including air, sea and coach fares, as well as petrol prices, rose as travel restrictions eased during parts of the month.’
‘These were partially offset by falling food prices, most notably for vegetables and meat.’
Covid-19 also continues to dictate Sterling movement, with the vaccine rollout a continuing success, markets remain optimistic on when lockdown restrictions will come to an end.
Australian Dollar (AUD) Benefits from US Presidential Inauguration
The Australian Dollar has been supported today as the US Presidential Inauguration gets underway and Joe Biden is sworn in as President.
The inauguration has improved risk sentiment with hopes that the new Biden Administration will announce a massive coronavirus stimulus programme to help aid the American economy.
As a result, demand for the risk-sensitive ‘Aussie’ has risen this week.
Appetite for the ‘Aussie’ has also increased as confidence in China’s economy improves, as the country has shown a growth following on from the beginning of the Covid-19 pandemic.
This provided further support as China is Australia’s largest trading partner.
Pound to Australian Dollar Outlook: ‘Aussie’ to be Buoyed by Falling Unemployment Rate?
Australian Dollar traders will be awaiting tomorrow’s release of December’s Australian Unemployment Rate report.
If this confirms forecasts and shows an improvement in Australia’s employment rate, then we will see AUD push higher.
AUD investors will also look towards any further updates from the US presidential inauguration as any further news on stimulus could boost demand for the risk-correlated ‘Aussie.’
GBP investors will be awaiting today’s speech from the Bank of England’s (BoE) Governor, Andrew Bailey, this evening, where any dovish forecasts would drag down the GBP/AUD exchange rate.
Sterling traders will also be eyeing any further UK Covid-19 developments, if infections continue to fall and vaccine rollouts are a continued success, the GBP/AUD exchange rate could head higher.