Pound Australian Dollar (GBP/AUD) Exchange Rate Pares Gains amid RBA Rate Hike Bets
(Updated 16:43 17/01/23)
The Pound Australian Dollar (GBP/AUD) exchange rate pared some of its gains today. The pairing could have seen losses amid an improvement in market mood after investors pared back bets on further interest rate hikes from the US Federal Reserve.
Market bets on further interest rate hikes from the Reserve Bank of Australia (RBA) could also be weighing on GBP/AUD. Analysts are anticipating a 25bps from the RBA despite evidence of a cooling labour market.
At time of writing the GBP/AUD exchange rate is at around AU$1.7556, which is up roughly 0.2% from this morning’s opening figures.
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Pound Australian Dollar (GBP/AUD) Exchange Rate Bolstered by UK Jobs Data
The Pound Australian Dollar (GBP/AUD) exchange rate is climbing today. The pairing may be finding support from above-forecast UK wage growth data. The figures may be adding to Bank of England (BoE) rate hike bets.
On the other hand, a cautious market mood may be capping gains for the exchange rate today.
At time of writing the GBP/AUD exchange rate is at around AU$1.7573, which is up roughly 0.3% from this morning’s opening figures.
Pound (GBP) Climbs as Above-Forecast Wage Growth Keeps Pressure On BoE
The Pound is firming against its rivals after robust jobs data earlier today. A cautious market mood may be capping any gains for Sterling, however.
The latest wage growth data for the UK may be bolstering the Pound today amid. Pay growth rose above forecast by 6.4% in November. This likely increased bets on further interest rate hikes from the Bank of England (BoE), which may be boosting GBP.
Samuel Tombs, an economist with Pantheon Macroeconomics, said:
‘The latest labour market data maintain the pressure on the by the Monetary Policy Committee to raise interest rates by another 50 basis points next month, rather than slow down.’
Additionally, unemployment held at 3.7% in November. The figures were close to previous 50-year lows.
On the other hand, Sterling may be coming under pressure from dovish comments from BoE Governor Andrew Bailey. Speaking in front of the Commons Treasury committee on Monday, Bailey signalled that there could be a ‘rapid’ fall in UK inflation in the coming months. The comments may be tempering more optimistic bets on BoE action.
Australian Dollar (AUD) Slips as China Sees Worst Growth Since 1976
The Australian Dollar (AUD) is falling today. A retreat in global risk appetite may be weighing on AUD. A raft of downbeat Chinese data may also be causing losses in the ‘Aussie’ today.
Chinese GDP figures for the fourth quarter of 2022 pointed to the one of the country’s worst years on record. Whilst fourth quarter GDP rose above forecast by 2.9%, China’s economy only grew by 3% over 2022.
Analysts also pointed to worrying figures concerning China’s population growth. Population figures fell at the end of 2022 for the first time since 1961.
Additionally, a slump in China’s retail sales may also be pulling AUD lower today. Sales contracted for a third consecutive month in December as soaring Covid infections continued to limit domestic demand.
GBP/AUD Exchange Rate Forecast: Will UK Inflation See Investors Pare Back BoE Bets?
Looking to the week ahead for the Pound, inflation data on Wednesday could undermine today’s robust jobs data if figures print as forecast. December’s rate of inflation is expected to slip to 10.5% which could prompt a pullback in BoE rate hike bets.
Friday’s predicted recovery in retail sales could help to stem any losses for Sterling, however. December’s sales are expected to climb out of negative territory following positive profit reports from the festive period.
Domestic headlines may also drive movement in the Pound over the rest of the week. Further strike action and the UK government’s ‘anti-strike’ legislation may cause some volatile movements.
For the Australian Dollar, unemployment data on Thursday could provide a boost to AUD if it prints as forecast. December’s unemployment rate is expected to remain close unchanged from October’s lows which may bolster bets on Reserve Bank of Australia (RBA) rate hikes.
Any signs of a further rise in Chinese Covid case levels could cap gains for the ‘Aussie’ as the week goes on, however.