Pound Australian Dollar (GBP/AUD) Exchange Rate Craters as RBA Charts Bolster Rate Hike Bets
The Pound Australian Dollar (GBP/AUD) exchange rate is sliding this morning, after the latest data from the Reserve Bank of Australia (RBA) was published.
At the time of writing, GBP/AUD is trading at around AU$1.7550, a decline of nearly 1.4% from today’s opening rates.
Australian Dollar (AUD) Skyrockets as RBA Charts Boost Rate Hike Bets
The Australian Dollar (AUD) is rocketing this morning, following the release of the Reserve Bank of Australia’s (RBA) chart pack.
These charts indicate that inflation remains far beyond the RBA’s target of 2-3%, meaning the bank can hike rates further. As such, investors are optimistic of further tightening from the RBA, and are flocking to boost the ‘Aussie’.
Furthermore, reports have circulated that the RBA is considering a hawkish path forward. The RBA believe that current economic conditions leave room for further tightening, with most households able to weather the storm.
Elsewhere, China appears to be close to removing the unofficial ban on Australian coal imports, bringing further tailwinds for AUD. With coal being one of Australia’s key exports, the news has brought cheer to investors as the economic outlook brightens.
Pound (GBP) Struggles for Support amid Bleak Domestic Headlines
The Pound (GBP) is lacking direction this morning, slipping against riskier currencies and firming against safer options.
Domestic woes remain investor’s focus today, with the latest consumer credit data from the Bank of England (BoE) showing increased borrowing. The increase from £0.7bn to £1.5bn, predominantly on credit cards, showed that UK households were leaning more on credit.
With inflation and the cost-of-living remaining high, investors were mindful of how households would be able to manage the crises.
Similarly, food inflation levels rose again in December hitting a record level of 15% for fresh produce and 13.3% annually. The British Retail Consortium (BRC), stated that this was the highest monthly rate since they began collecting data in 2005.
With households remaining severely pressured, recession anxieties may be deepening for investors, prompting the lack of support seen this morning.
Pound Australian Dollar (GBP/AUD) Exchange Rate Forecast: Chinese Services Index to Dent AUD?
Looking ahead for the Australian Dollar (AUD), the key driver of movement is likely to be tomorrow’s Caixin services PMI. The December index for China’s service sector is forecast to show a contraction from 46.7 to 44.5.
Due to the ‘Aussie’s nature as a Chinese proxy-currency, the contraction may weigh heavily on AUD over tomorrow’s session.
Meanwhile for the Pound (GBP), December’s final services PMI index is due to print tomorrow. Should the expected increase print as forecast, it may do little to sway Sterling. However, if a shock change occurs GBP could weaken if it falls.
Elsewhere, domestic headlines in the UK may play a role in shaping the Pound’s direction tomorrow. With industrial action continuing with little sign of slowdown, the impact on the UK economy may weaken GBP.