Pound Australian Dollar (GBP/AUD) Exchange Rate Soars after Hawkish Comments from BoE’s Pill
(Updated 16:36 04/04/23)
The Pound Australian Dollar (GBP/AUD) exchange rate continued its rally today. The pairing is likely finding sustained support from the Reserve Bank of Australia’s (RBA) decision to hold interest rates at 3.6%. A persistently upbeat market mood may also be bolstering the exchange rate.
GBP/AUD may have also seen a boost from additional bets on further policy tightening from the Bank of England (BoE). Hawkish signals from chief BoE economist Huw Pill could be adding weight to that sentiment.
Speaking on Tuesday, Pill said:
‘On balance the onus remains on ensuring enough monetary tightening is delivered to ‘see the job through’ and sustainably return inflation to target.’
At time of writing the GBP/AUD exchange rate is at around AU$1.8541, which is up around 1.3% from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Finds Support from Diverging Rate Hike Paths
The Pound Australian Dollar exchange rate is making strong gains today. The Reserve Bank of Australia’s interest rate decision may be pushing GBP/AUD higher.
Additionally, persistent bets on further rate hikes from the Bank of England (BoE) may be bolstering the exchange rate.
At time of writing the GBP/AUD exchange rate is at around AU$1.8472, which is up roughly 0.9% from this morning’s opening figures.
Australian Dollar (AUD) Nosedives as RBA Holds Interest Rates at 3.6%
The Australian Dollar (AUD) is tumbling today following the RBA’s interest rate decision overnight. A retreat in iron ore prices may also be weighing on the risk-sensitive ‘Aussie’.
The Reserve Bank of Australia (RBA) left its cash rate unchanged at 3.6% after 10 consecutive months of hikes. The pause had largely been forecast by markets ahead of the meeting, and comes after signs of easing inflation in the Australian economy.
Speaking after the meeting, RBA Governor Philip Lowe said:
‘The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty.’
The dovish decision from the RBA is likely prompting AUD’s downturn today. On the other hand, the central bank did signal that further rate hikes may be necessary in the future. These hints may be cushioning losses for the ‘Aussie’.
Pound (GBP) Buoyed by BoE Rate Hike Bets
The Pound (GBP) is climbing against its peers today. Bets on a path of additionally policy tightening from the Bank of England (BoE) may be lending support to Sterling.
Markets are continuing to price in at least 25bps worth of interest rate hikes at the BoE’s May meeting alongside additional rate hikes during the summer of 2023.
However, GBP may be seeing its gains curbed by expectations of a pause in policy tightening from the central bank.
Domestic headwinds may also be keeping pressure on the Pound today.
GBP/AUD Exchange Rate Forecast: Will Signals from Pill Drive GBP Movement?
The Pound could potentially be pushed higher later today by policy signals from the BoE. Chief economist Huw Pill is set to give a speech which investors will be watching for any hints of the central bank’s forward path.
Also today, the release of the BoE’s financial policy summary for March could inspire additional movement in GBP if markets pick up on any rate hike signals.
The final reading of March’s services PMI may have a limited effect on Sterling on Wednesday. Whilst the reading is expected to confirm a downturn in March, the sector is still set to remain in growth. GBP may tick higher as a result.
Following the RBA’s interest rate decision, the Australian Dollar could be affected by the reaction to their meeting during the European session.
A speech from RBA Governor Philip Lowe on Wednesday could add to any sentiment surrounding the central bank’s forward policy.
Also on Wednesday, the final reading of Australia’s March services PMI could pull AUD lower if it confirms a contraction in the sector.
The Australian Dollar may see a boost at week’s end however if the latest Chinese services PMI prints as forecast. The world’s second-largest economy is expected to have seen continued growth in the sector last month.