Pound Australian Dollar (GBP/AUD) Exchange Rate Slips amid RBA Rate Hike Bets
(Updated 16:26 27/01/23)
The Pound Australian Dollar (GBP/AUD) exchange rate remained in negative territory of the course of the day. The exchange may have continued to see its gains capped by sustained bets on further interest rate hikes from the Reserve Bank of Australia (RBA).
Conversely, Bank of England (BoE) rate hike bets could have prevented any significant losses for GBP/AUD. A cautious market mood may have also propped up the pairing.
At time of writing the GBP/AUD exchange rate is at around AU$1.7423, which is down roughly 0.2% from this morning’s opening figures.
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Pound Australian Dollar (GBP/AUD) Exchange Rate Falls Despite BoE Rate Hike Bets
The Pound Australian Dollar (GBP/AUD) exchange rate is slipping today. The downbeat forecasts for the UK’s economy could be pushing the pairing lower.
Losses for GBP/AUD may be stemmed by cooler Australian PPI figures, however.
At time of writing the GBP/AUD exchange rate is at around AU$1.7413, which is down roughly 0.3% from this morning’s opening figures.
Australian Dollar (AUD) Trends Lower after Cooler PPI, Climbs Against GBP
The Australian Dollar (AUD) is edging lower today. Cooler PPI figures and Covid worries in China may be weighing on the ‘Aussie’. The AUD is making gains against a weaker Pound, however.
A slowdown in fourth quarter PPI may be keeping pressure on the Australian Dollar today. PPI rose by just 0.7% in the fourth quarter of 2022. The cooler figures came amid intensifying price pressures and supply chain issues.
The data may be prompting markets to pare back their bets on further interest rate hikes from the Reserve Bank of Australia (RBA). This could also be prompting losses for AUD today.
Speculation that China’s Covid-19 case levels may be worse than reported could also be causing AUD to slip lower. Whilst Chinese authorities have signalled that cases have passed the peak, experts are warning that regional authorities may be underreporting case levels.
Pound (GBP) Slides as UK’s Outlook Remains Downbeat
The Pound (GBP) is slipping against its peers today. A cautious market mood could be weighing on Sterling.
The UK’s poor outlook may also be adding to Sterling’s woes. Recession forecasts for the UK have worsened this week, as well as downgraded growth forecasts. Additionally, persistent industrial action may be denting confidence in GBP.
A speech from Jeremy Hunt failed to provide any support to the Pound. Hunt outlined his plans for growth for the UK economy.
Sterling may have seen its losses limited by persistent bets on a 50bps interest rate hike from the BoE. Markets have continued to price in the move despite signs of cooling inflation.
GBP/AUD Exchange Rate Forecast: Will BoE Rate Hike Bolster Pound?
Looking ahead to next week for the Pound, the final reading of January’s PMI for the manufacturing sector could lend support to Sterling if it prints as forecast. Wednesday’s data is expected to indicate an improvement in the sector, although the reading is expected to remain in negative territory.
Investors will be most keenly awaiting the BoE’s interest rate decision on Thursday. Bets have largely been on a 50bps rate hike from the central bank which could boost GBP. Evidence of cooling inflationary pressures has led to some speculation of a more cautious approach, however. A below-forecast rate hike could prompt losses in the Pound.
Finally on Friday, the final reading of January’s PMI for the UK’s services sector could weigh on Sterling if the data prints as forecast. Output for the sector is expected to have contracted further in January.
For the Australian Dollar, a predicted slowdown in retail sales on Monday could push AUD lower. Cooler sales figures for December may dent confidence in the previously resilient Australian economy.
The final reading of PMI data for the country’s manufacturing sector on Tuesday could deepen losses for the ‘Aussie’. January’s PMI from Judo Bank is expected to see the sector slip into contraction.
On Wednesday, the final reading of January’s Judo Bank services PMI could have a mixed effect on AUD. The sector’s output is set to improve but remain in negative territory.