Pound Australian Dollar (GBP/AUD) Exchange Rate Subdued as BoE Set to Deliver 14th Straight Hike
(Updated 3/8/23, 09:00)
The Pound Australian Dollar (GBP/AUD) exchange rate is trading narrowly this morning as the market braces for the interest rate decision today from the Bank of England (BoE). But the question still remains over the size of the interest rate hike. Many economists believe the outlook warrants another 50bps increase, but a lack of communication from the Monetary Policy Committee (MPC) could mean a quarter-point increase is the more likely option.
At time of writing the GBP/AUD exchange rate is trading around $1.9445, relatively unchanged from this morning’s opening levels.
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GBP/AUD Exchange Rate Firms as Investors Brace for Fresh 15-Year High Rates
(Updated 2/8/23, 17:00)
The Pound Australian Dollar exchange rate pared some of its earlier gains as GBP investors moved to the sidelines ahead of tomorrow’s decision. With a hike all but baked in, the question lingers over the size of the increase, as well as the forward guidance. A hawkish BoE could send the Pound skyrocketing.
At time of writing the GBP/AUD exchange rate is trading around $1.9418, a 0.22% jump from this morning’s opening levels.
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GBP/AUD Exchange Rate Soars as Market Sentiment Slides
The Pound Australian Dollar exchange rate is surging amid a downbeat market mood and elevated Bank of England (BoE) rate hike expectations.
At time of writing the GBP/AUD exchange rate is trading around $1.9432, a 0.58% surge from this morning’s opening levels.
Australian Dollar (AUD) Plunged on Souring Market Sentiment
The Australian Dollar (AUD) is continuing its freefall amid a downbeat market mood. After the Reserve Bank of Australia (RBA) opted to keep the cash rate unchanged yesterday, the ‘Aussie’ has srtruggled. And an overly cautious market mood could be weighing further on the ‘Aussie’ after credit agency Fitch downgraded the United States’ credit rating.
Citing fiscal deterioration over the coming years and mounting government debt, the move by Fitch soured market sentiment. Economists at Capital Economics said of the situation:
‘The announcement is not a complete surprise given that Fitch hinted at such a move during the recent debt ceiling standoff and had a long-standing negative outlook on its AAA rating.
‘It’s a little strange to be downgrading the US at a time when the economy now appears poised to pull off the seemingly impossible trick of bringing inflation back to target without triggering a recession.’
The risk-sensitive ‘Aussie’ is also struggling for support as concerns over China’s post-Covid recovery linger. With the latest services PMI due to be released in the overnight session, further evidence that the rebound is faltering could dampen moods further. However, the prospect of economic stimulus from China could inspire a modest lift for the Australia Dollar.
Pound (GBP) Supported by Elevated Rate Hike Bets
Meanwhile, the Pound (GBP) is remaining fairly listless against most of its peers amid a lack of economic data. But speculation over the interest rate decision tomorrow could be providing Sterling with some support.
The latest monetary policy decision will be occupying the market’s attention as investors debate over the size of the rate hike. Another raise is a virtual certainty, but the size of which is still contentious. A 25bps rate hike is the more likely, with a bumper consecutive 50bps increase also on the table. A Bloomberg survey showed 41 of 56 economists expecting a quarter-point raise.
Pound Australian Dollar Forecast: Hawkish BoE to Bolster the Pound?
Looking ahead, the Pound Australian Dollar exchange rate could see further movement with the latest BoE interest rate decision. If the BoE turn hawkish in their forward guidance and hint at further tightening, Sterling could climb even higher.
Meanwhile, both China services PMI and Australian retail sales could influence the Australian Dollar. Sales in the retail sector in the month of June are expected to decline by 0.8%, which could send the ‘Aussie’ lower.