Pound Australian Dollar (GBP/AUD) Exchange Rate Fluctuates in Overnight Trade
The Pound Australian Dollar (GBP/AUD) exchange rate fell in overnight trade as it pared back the majority of the gains it found on Tuesday. The exchange rate may have come under pressure from a rebound in the price of iron ore. News of an imminent trade agreement between the UK and Australia may also be prompting subdued bets on the pair.
Tepid expectations for further action from the Bank of England may also be pulling GBP/AUD lower today.
At time of writing the GBP/AUD exchange rate is at around AU$1.7935, which is virtually unchanged from this morning’s opening figures.
Pound Australian Dollar (GBP/AUD) Exchange Rate Rises as RBA Signals Rate Hike Pause
(Updated 16:35 07/03/23)
The Pound Australian Dollar (GBP/AUD) exchange rate moved little from its earlier postion over the course of the day. The pairing continued to make gains as markets digested the Reserve Bank of Australia’s interest rate decision. A risk-on mood may have kept the exchange rate from climbing higher, however.
The RBA hiked interest rates by 25bps today whilst signalling that a pause in their rate hike cycle would likely be implemented in the coming months.
RBA Governor Philip Lowe also stated that the Australian economy may not avoid a hard landing after a period of sustained rate hikes. This downbeat assessment may have bolstered the pair further.
Speaking on the decision, AMP Capital Markets’ senior economist Diana Mousina said:
‘I’d call it a dovish hike. They still have a tightening bias but my reading is that April will be a pause. By the time we reach May there will be enough data to suggest that the economy has slowed to not warrant further hikes.’
At time of writing the GBP/AUD exchange rate is at around AU$1.7968, which is up roughly 0.6% from this morning’s opening figures.
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Pound Australian Dollar (GBP/AUD) Exchange Rate Soars after Dovish RBA Meeting
The Pound Australian Dollar (GBP/AUD) exchange rate is making strong gains today. The pairing is likely finding support from signs that the Reserve Bank of Australia (RBA) will soon pause its policy tightening.
At time of writing the GBP/AUD exchange rate is at around AU$1.7991, which is up roughly 0.7% from this morning’s opening figures.
Australian Dollar (AUD) Plummets after RBA Interest Rate Decision
The Australian Dollar (AUD) is tumbling today following the Reserve Bank of Australia’s interest rate decision. Dovish signals from the central bank may be weighing on the risk-sensitive ‘Aussie.
The RBA hiked interest rates by 25bps today with Governor Philip Lowe signalling that any future decisions would be ‘data-driven’. Markets took Lowe’s comments as indicators of a possible pause in policy tightening from the central bank.
James McIntyre, economist at Bloomberg, said:
‘We see slowing demand, a weakening labor market and peaking inflation eventually driving the RBA to go on hold after its May meeting.’
Lowe also signalled that a soft landing for Australia’s economy may be difficult after having raised rates to their highest point since June 2012.
An above-forecast narrowing in the country’s trade surplus may also be pushing AUD lower today. A drop in coal exports was highlighted as a primary reason for the drop.
Pound (GBP) Subdued as BoE’s Mann Signals Further Hikes
The Pound (GBP) is edging higher today. Hawkish comments from Bank of England policymaker Catherine Mann may be helping GBP to firm.
Speaking to Bloomberg TV, Mann signalled that she felt ‘more needs to be done with rates’ and that she was ‘concerned about the persistence of core inflation’.
GBP’s gains may be capped by a general pullback in BoE rate hike bets, however. A 25bps rate hike has already been priced in by markets, with some analysts even anticipating a pause in policy tightening.
Mann also stated that she felt the UK’s housing market was in the process of recovering. Her statement was supported by a rise in house prices in February. The news may be lending support to Sterling.
GBP/AUD Exchange Rate Forecast: Will Upbeat UK GDP Data Bolster Sterling?
Looking ahead to the rest of the week for the Pound, January’s GDP data could inspire gains in the currency if it prints as forecast. Friday’s figures are expected to confirm a 0.1% expansion in the UK’s economy in the first month of 2023. If the data prints as forecast, it could also help to stem fears of a deep recession for the UK.
Also on Friday, a narrowing in January’s goods deficit may push GBP higher if the data prints as forecast.
Sterling may also come under pressure from any shifts in BoE rate hike expectations this week. If markets continue to shift their expectations away from further policy tightening then the Pound may fall.
For the Australian Dollar, the aftershocks from the RBA’s interest rate decision may drive short-term movement in the ‘Aussie’. The dovish signals from the central bank may keep pressure on the currency.
A speech from RBA Governor Philip Lowe later today could add to the downbeat sentiment surrounding AUD if he gives further hints of a policy tightening slowdown.
Thursday’s inflation data from China, Australia’s primary trading partner, could prompt further losses in AUD if it prints as expected. February’s inflation is forecast to slip to 1.9%. The figures could prompt fears of deflation in the world’s second-largest economy.