Pound Australian Dollar (GBP/AUD) Exchange Rate Leaps as Economists Forecast RBA Rate Hold
(Updated 16:40 28/04/23)
The Pound Australian Dollar (GBP/AUD) exchange rate is continuing to rise today. The pairing may be finding support from bets on a rate hike pause from the Reserve Bank of Australia (RBA).
A poll of economists, conducted by Reuters and released today, indicated that 75% of those surveyed favoured a pause in policy tightening from the central bank. GBP/AUD may be seeing its gains limited by some expectations of future rate hikes from the RBA, though.
Adelaide Timbrell, senior economist at ANZ, said:
‘Nothing in this major data release is likely to disrupt the Reserve Bank’s decision to hold in order to assess the lags of monetary policy. But we do think further monetary policy tightening will be needed. Inflation for the June quarter will come out in late July and will give the Reserve Bank some key information coming into their August meeting and we think that inflation number will be high enough to allow the Reserve Bank to make that call in August.’
At time of writing the GBP/AUD exchange rate is at around AU$1.9024, which s up roughly 0.9% from this morning’s figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Brightens amid RBA Pause Bets
The Pound Australian Dollar exchange rate is climbing today. Bets on a pause in policy tightening from the Reserve Bank of Australia (RBA) may be pushing the pairing higher.
Additionally, upbeat UK business sentiment figures may also be keeping GBP/AUD buoyed.
At time of writing the GBP/AUD exchange rate is at around AU$1.8934, which is up roughly 0.5%.
Australian Dollar (AUD) Slumps amid Expectations of RBA Rate Pause
The risk-sensitive Australian Dollar (AUD) is tumbling today amid a retreat in global risk appetite. Bets on a pause in policy tightening from the Reserve Bank of Australia (RBA) may also be keeping pressure on AUD.
Above-forecast PPI figures seem to be failing to lift the ‘Aussie’ today. First quarter PPI printed a rise of 1% versus the expected slowdown to 0.8%. Markets are likely paying little attention to the data following softer headline CPI figures earlier this week.
Speaking on the RBA’s decision next week, ING’s Head of Asia-Pacific Research Rob Carnell said:
‘Volatile data, such as labour market figures, might create a more confusing picture for the RBA than the inflation figures alone, but it is hard to see these being sufficiently bad to justify an additional increase.’
Downbeat forecasts for China’s manufacturing sector may be adding to AUD’s losses today. A poll of economists, conducted by Reuters, predicted that China’s factory activity is set to fall by more than forecast in April.
Pound (GBP) Climbs as Business Confidence Hits 11-Month High
The Pound (GBP) is rising against its peers today. A buoyant business confidence reading may be boosting Sterling.
Lloyds Bank’s business barometer rose to 33% in March, its highest reading for eleven months. Analysts stated that the reading indicated positive momentum in the UK’s economy.
The data from Lloyds also indicated that wage growth in the UK private sector hit a seven-month high. This further evidence of inflationary pressures may be prompting fresh Bank of England (BoE) rate hike bets. In turn, this may be prompting additional gains in GBP.
GBP/AUD Exchange Rate Forecast: Will RBA Rate Pause Push AUD Lower?
For the Australian Dollar, all eyes will be on the RBA’s interest rate decision on Tuesday. The central bank is forecast to leave rates unchanged following recent cooler inflation data. This decision could dampen enthusiasm for the ‘Aussie’.
A forecast rise in March’s retail sales could help cushion any losses for AUD on Wednesday, however. The rise in sales volumes comes after a disappointing reading for February.
The ‘Aussie’ could see further movement following the RBA’s monetary policy statement on Friday. Any additional dovish signals from the central bank could pull the Australian Dollar lower.
Finally for AUD, the latest Chinese private sector data could bolster the Australian Dollar if it prints as forecast. Performance across all of China’s private sectors is expected to have improved in April.
Next week is set to bring another sparse data calendar for the Pound. The final reading of the April’s manufacturing PMI could dent confidence in Sterling if it confirms a downturn in the sector.
On the other hand, the final reading of April’s services PMI on Thursday could lend some support to GBP. The reading is set to confirm a rise in output to 54.9, the highest reading in 13 months.
Finally for Sterling, BoE rate hike bets could inspire gains in the currency over the coming week. Markets are continuing to price in a 25bps hike from the central bank at its meeting next month.