Pound Australian Dollar Exchange Rate Fluctuates ahead of US Inflation Data
The Pound Australian Dollar (GBP/AUD) exchange rate is trading narrowly as a cautious market awaits the latest US inflation data.
At time of writing the GBP/AUD exchange rate is trading around $1.9467, relatively unchanged from this morning’s opening levels.
Australian Dollar (AUD) Undermined by Rising Geopolitical Tensions
The Australian Dollar (AUD) is trading erratically this morning amid a turbulent market mood. With the focus today on US inflation data, returning US-China frictions to the fray further complicates things.
President Joe Biden signed an executive order curbing US investment in Chinese technology, stretching to semi-conductors and artificial intelligence. A spokesperson for China’s Commerce Ministry responded:
‘We hope that the US side will respect the laws of market economy and the principle of fair competition, refrain from artificially impeding global economic and trade exchanges and cooperation, as well as setting obstacles for the recovery of world economic growth.’
Pound (GBP) Quiet as Economic Woes Linger
Meanwhile, the Pound (GBP) remains subdued amid a lack of economic data. With investors eyeing tomorrow’s GDP growth report, Sterling is struggling to shake off economic concerns.
However, growing optimism that the UK could avoid a recession could be keeping the Pound from falling. With inflationary pressures easing and consumer spending declining. With the latest GDP growth in focus for GBP investors, the market will be keen to learn how the economy is dealing with soaring interest rates.
With some predicting a mild Q2 growth, which would highlight the strength of the economy, bolstering rate hike bets. And with inflation stubbornly high, almost four times the target rate of 2%, continued tightening is all but guaranteed. If the economy proves to be resilient, the concerns of surging interest rates impacting the UK could be tempered, lifting Sterling.
Pound Australian Dollar Forecast: Strong US Inflation to Sour Moods Further?
Looking ahead, the Pound Australian Dollar exchange rate could see big movement today with external factors. An expected acceleration in US inflation, the first increase in a year, could revive interest rate hike bets from the Federal Reserve. Market sentiment could dip, dragging the ‘Aussie’ lower.
Meanwhile, the latest economic growth data for the UK will print tomorrow. An expected stagnation in quarterly growth could weigh on the Pound. Despite a predicted modest rise in monthly economic growth, the concerning zero growth in Q2 could overshadow any potential gains.