(Updated 16:45 26/04/22)
The Pound Australian Dollar (GBP/AUD) continued to fall today. Both currencies suffered from risk-aversion within the markets. The Australian Dollar (AUD) seemed to remain buoyant against many of its rivals however amid expectations of a rate hike from the Reserve Bank of Australia (RBA).
The Pound (GBP) meanwhile was one of the worst performers of the day. Investors have continued to limit their expectations of an aggressive rate hike from the Bank of England (BoE) today. This has in turn weighed on Sterling.
At time of writing the GBP/AUD exchange rate is at around $1.7647, down around -0.6% from this morning’s opening figures.
Pound Australian Dollar (GBP/AUD) Exchange Rate Drops amid Gloomy UK Outlook
The Pound Australian Dollar (GBP/AUD) exchange rate is falling today. The Australian Dollar (AUD) recovered some of yesterday’s losses overnight amid some market stability. The Pound (GBP) meanwhile is also recovering slightly amid bets on a rate hike from the Bank of England (BoE). Gloomy prospects for the UK economy are keeping Sterling on the backfoot, however.
At time of writing the GBP/AUD exchange rate is at around $1.7672, which is down roughly -0.4% from this morning’s opening figures.
Australian Dollar (AUD) Gains as Economists Predict Imminent RBA Rate Hike
The Australian Dollar (AUD) is climbing higher against its rivals today. Expectations of a rate hike from the Reserve Bank of Australian (RBA) are likely bolstering the currency. Major gains for the ‘Aussie’ could be limited however by fears of an economic slowdown across China.
A forecast rise to inflation tomorrow may be increasing speculative bets on the Australian Dollar today. Multiple economists have stated their belief that the RBA is set to raise rates at their May meeting.
Betashares chief economist David Bassanese said:
‘Given heightened global supply chain bottleneck problems, and more aggressive rate hikes expected in the United States, however, I now think the RBA should, and likely will, raise interest rates next week by 15 basis points.’
Economists at Westpac however believe that a more substantial rate hike in June is the more likely option.
Major gains for the ‘Aussie’ could be limited by global market concerns of Chinese economic growth, however. Authorities in Beijing have ramped up Covid-19 testing efforts in an effort to avoid the imposing harsh lockdowns similar to those in Shanghai.
Concerns over Chinese growth have also severely hampered the commodities market this week. The price of iron ore fell by nearly 9% on Monday. Rears of reduced demand in China are the likely cause any may hamper growth for AUD.
Pound (GBP) Drops despite Bets on BoE Rate Hike
The Pound (GBP) is falling against its competitors today. Major losses for Sterling may be limited by expectations of a rate hike from the Bank of England (BoE), however. On the other hand, fears over the country’s cost-of-living crisis and soaring inflation may keep GBP lower today.
The BoE has softened its language around rate hikes in the past few weeks. In a recent speech, Governor Andrew Bailey stated that the central bank was ‘walking a very tight line’ between curbing inflation and potentially pushing the UK into an early recession.
Despite this, the markets remain relatively certain the BoE will enact a rate hike at their next meeting. A poll conducted by Reuters found that thirty-three of the forty-four economists surveyed expected the central bank to raise rates by 0.25% at their May meeting.
The same survey also found that seventeen out of twenty-two economists believed the country’s cost of living crisis would have a severe impact on the UK’s economic growth. This gloomy outlook for Sterling is likely to continue to keep the currency suppressed today.
GBP/AUD Exchange Rate Forecast: Will Bailey Signal Rate Hike in May?
Looking ahead for the Pound, investors will be most keenly awaiting Thursday’s speech from BoE Governor Andrew Bailey for signals of a May rate hike. GBP could recover some of its losses should Bailey forecast such a move.
For the Australian Dollar, Wednesday’s expected rise to the country’s rate of inflation could push the ‘Aussie’ higher. A forecast rise to PPI figures on Friday could have the same effect, with both data releases likely to increase speculative bets on the currency.