Pound Australian Dollar (GBP/AUD) Exchange Rate Firms as RBA Remains Cautious
The Pound Australian Dollar (GBP/AUD) exchange rate is firming this morning, as the Reserve Bank of Australia (RBA) remains cautious.
As the RBA considering slowing their interest rate hikes, GBP/AUD is trading at around AU$1.8166. This shows a rise of 0.2% from the morning’s opening rates.
Australian Dollar (AUD) Weakens as RBA Considers Tightening Slowdown
The Australian Dollar (AUD) is sliding this morning, following the overnight publication of the Reserve Bank of Australia’s (RBA) meeting minutes.
In the minutes, the RBA outlined that the uncertain economic outlook for Australia may point towards a need for slowdown.
The minutes stated:
‘The Board did not rule out returning to larger increases if the situation warranted. Conversely, the Board is prepared to keep the cash rate unchanged for a period while it assesses the state of the economy and the inflation outlook.’
While the RBA went on to show it expects to increase interest rates further, investors remained focused on the caution displayed. As such, they began to readjust expectations for higher rate hikes, serving to weaken the ‘Aussie’.
Similarly to GBP, risk-appetite is also weighing on the ‘Aussie’ this morning. As a risk-sensitive currency, AUD is more sensitive to fluctuations in market mood, adding further headwinds.
Pound (GBP) Mixed as Thin Trading Conditions Point Investors to Domestic Headlines
The Pound (GBP) is seeing mixed trade this morning, as a lack of economic data means investors are focusing on headlines.
With industrial action continuing throughout the UK, nurses have begun a second day of walkouts. Health chiefs in the UK are concerned about ambulance staff beginning to strike tomorrow.
PM Rishi Sunak has warned that the strikes are likely to continue for months, as he closed the door to further pay negotiations. As such, the bleak news is serving to sap sentiment towards Sterling for investors.
Sunak stated in an interview that:
‘We do need to think about what’s the right approach for next year. Of course that’s a conversation we will have with the unions, with the pay review bodies, as we think about the right pay settlements.’
Furthermore, mixed risk appetite across markets may be keeping Sterling levelled this morning. With GBP becoming increasingly risk-sensitive, a souring market mood could weigh on GBP further.
Pound Australian Dollar (GBP/AUD) Exchange Rate Forecast: CBI Retail Data to Dent Sterling?
Looking ahead for the Pound, tomorrow’s retail sales data from the Confederation of British Industry (CBI) may be a pressure. With a fall expected from -19 to -23, the data is expected to show that retail sales during December are below expectations.
As such, this may stoke further recession fears by showing a weakening retail sector, pulling Sterling lower.
For the Australian Dollar, trading conditions will remain thin over the short term. As such, the risk-sensitive ‘Aussie’ may continue to trade on market sentiment. If risk appetite improves, the Australian Dollar may strengthen.