Pound Australian Dollar (GBP/AUD) Exchange Rate Firms amid BoE Rate Hike Bets
(Updated 16:39 30/03/23)
The Pound Australian Dollar (GBP/AUD) exchange rate is rising today. Hawkish bets on additional interest rate hikes from the Bank of England (BoE) may be pushing the pairing higher.
Despite evidence the BoE is approaching its rate peak, markets are continuing to price in more interset rate increases from the central bank. The increased bets may be coming due to signs of stability in the UK and European banking sectors.
At time of writing the GBP/AUD exchange rate is at around AU$1.8460, which is up roughly 0.2% from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Trends Sideways as Risk Appetite Returns
The Pound Australian Dollar exchange rate is trading in a narrow range today. A risk-on market mood may be curbing the pairing’s upward movement.
On the other hand, upbeat signs from the UK economy may be underpinning GBP/AUD today.
At time of writing the GBP/AUD exchange rate is at around AU$1.8413, which is virtually unchanged from this morning’s opening figures.
Pound (GBP) Climbs amid ‘Signs of Green Shoots’ in UK Economy
The Pound (GBP) is firming today. Positive signs from the UK’s private sectors may be boosting Sterling.
GBP could be finding support from the Confederation for British Industry’s (CBI) latest growth report. The CBI stated that the UK’s economy was showing ‘signs of green shoots’ despite an eighth consecutive quarter of contraction in the country’s private sectors.
The CBI’s also outlined their expectations for 5% growth in the next quarter. The organisation was quick to temper any optimism however, which may be limiting gains for GBP today.
Alpesh Paleja, CBI Lead Economist, said:
‘At best, this illustrates an economy skirting stagnation-like conditions rather than delivering the strong, sustainable growth we need.’
Sterling may also be facing pressure from cautious comments from Bank of England (BoE) policymaker Catherine Mann overnight.
Speaking at the National Association for Business Economics, Mann signalled that mixed inflationary pressures could make the central bank’s job ‘difficult’.
Australian Dollar (AUD) Bolstered by Risk-On Mood
The Australian Dollar (AUD) is gaining today. The risk-sensitive ‘Aussie’ could be gaining ground amid a return of risk appetite. The positive risk mood may be due to signs of stability in the global banking sector.
AUD’s upward movement may be limited by sign that the Reserve Bank of Australia (RBA) will continue its dovish pivot in the coming months.
The softening in bets came after a cooldown in February’s inflation on Wednesday. Nevertheless, some experts are still predicting a rate hike from the RBA at their next meeting. This may be helping AUD to consolidate its gains.
Brendan Rynne, KPMG Australia’s chief economist, said:
‘While today’s data will give the RBA pause for thought, KPMG believes inflation is still sufficiently high and employment too strong for the RBA to call a halt to the cash rate rises just yet. We believe, as other main central banks have done this month, the RBA will raise the rate again next week.’
GBP/AUD Exchange Rate Forecast: Will UK GDP Improvement Bolster Pound?
The Pound could be lifted by the final reading of fourth quarter GDP figures on Friday. The reading is confirm a 0% stagnation in the UK economy. Sterling could see additional gains if investors see the data as evidence that the UK avoided a technical recession last year.
Bets on further action from the BoE could also lend support to the Pound in the coming days. Markets are increasing pricing in another rate hike from the central bank at their next meeting.
The Australian Dollar will see no other significant data releases this week. Wednesday’s inflation could continue to drive expectations of a rate hike pause from the RBA. This could weigh on the ‘Aussie’.
AUD could see mixed movements on Friday following the latest data from the Chinese private sector. March’s PMI are set to indicate positive output across all private sectors, although output is expected to dip slightly. The slight downturn could curb any potential gains for the Australian Dollar.