Pound Australian Dollar (GBP/AUD) Exchange Rate Slides as Bullish Trade Boosts AUD
(Article updated 15:20, 12/4/23) The Pound Australian Dollar (GBP/AUD) exchange rate is falling this afternoon, as investors look for riskier investments following the latest US CPI data release.
With headline inflation appearing to have cooled significantly in March, investors pared back their expectations on further tightening from the Federal Reserve.
This held the knock-on effect of elevating the market mood, as it diminished the chances of the American economy weakening. If the US economy faltered, the global economy would likely follow suit. As such, investors appear to be chancing their luck on riskier assets, leading to the ‘Aussie’s late-session strength.
Furthermore, Banke of England (BoE) Governor Andrew Bailey’s speech appeared to do little to inspire Sterling. As such, GBP is trading in a mixed capacity this afternoon.
At the time of writing, GBP/AUD is trading at around AU$1.8616, a fall of roughly 0.4% from the morning’s opening rates.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Stumbles ahead of BoE Bailey Speeches
The Pound Australian Dollar exchange rate is edging downwards this morning. Investors are looking ahead to a duo of speeches from Bank of England (BoE) Governor Andrew Bailey this afternoon.
At the time of writing, GBP/AUD is trading at around AU$1.8649, a fall of roughly 0.2% from the morning’s opening rates.
Pound (GBP) Muted as Investors Await BoE Bailey Speech
This morning, the Pound (GBP) appears to be muted as Bank of England Governor Andrew Bailey is scheduled to speak this afternoon.
With the BoE’s forward guidance currently under scrutiny, investors are hoping for any comments which could indicate further hikes.
Currently, markets are pricing in a roughly 80% chance of one additional rate hike in May. However, some economists have begun to suspect that a pause is on the cards. Christ Turner, Global Head of Markets at ING, wrote:
‘The market prices an 80% chance of such an outcome, while our team thinks the BoE could stay on hold. There is a risk that [Governor Bailey] hints at a pause, having seen fellow central bankers in Australia and Canada do so over recent months’
Elsewhere, a lacking data calendar could be preventing Sterling from making significant moves as investors eye other opportunities.
Australian Dollar (AUD) Wavers amid Pessimistic Treasury Comments
The Australian Dollar (AUD) is wavering this morning, following pessimistic comments from Australian Treasurer Jim Chalmers.
In an interview, Dr Chalmers spoke about the Australian economy and indicated it would avoid a recession. However, he further warned of a slowing economy and spoke on the impact of interest rate hikes.
He stated:
‘The treasury does expect our own economy to slow considerably later this year because of that combination of a slowing global economy and the impact of higher interest rates here at home as well.’
However, a relatively upbeat market mood appears to be preventing AUD from losing ground. As a risk-sensitive currency, the ‘Aussie’ is more susceptible to these moods than Sterling.
GBP/AUD Exchange Rate Forecast: UK GDP Growth to Buoy GBP?
Looking ahead for the Pound, tomorrow sees the release of February’s GDP data. While the UK’s economy is forecast to have expanded by 0.1%, the slowdown from January’s figure could limit potential gains.
Later tomorrow, BoE Chief Economist Huw Pill is scheduled to deliver a speech. If he strikes a hawkish tone towards inflation, Sterling could strengthen.
For the Australian Dollar, the unemployment rate for March is scheduled to print overnight. An uptick is expected, which may weigh on the ‘Aussie’ by pointing to a cooling labour market.
Furthermore, the latest Chinese balance of trade figures are due. March’s trade surplus is forecast to have decreased substantially. If this prints accurately, AUD may weaken due to its nature as a Chinese proxy-currency.