Pound Australian Dollar (GBP/AUD) Hits Weekly High following RBA Rate Hike

Pound Australian Dollar (GBP/AUD) Exchange Rate Surges after RBA Interest Rate Decision

The Pound Australian Dollar (GBP/AUD) exchange rate is soaring today following the Reserve Bank of Australia’s (RBA) decision to raise interest rates.

At the time of writing the GBP/AUD exchange rate is trading at $1.9168, up approximately 0.8% from this morning’s opening rate.

Australian Dollar (AUD) Plummets following RBA Hike

The Australian Dollar (AUD) is in freefall this morning after the Reserve Bank of Australia’s (RBA) interest rate hike overnight.

The central bank delivered a widely anticipated raise to 4.35%, a twelve-year high. However, bets on more RBA rate hikes significantly dipped as investors speculated that the central bank could be heading towards a more tentative approach regarding monetary policy.

Following the bank’s rate hike, RBA Governor Michele Bullock opted for a notably more dovish tone than used in recent weeks. Consequently, AUD is slumping today amid the opinion that the RBA’s rate hike may have been a one-off, as the Australian economy remains fragile.

David Bassanese, Chief Economist at BetaShares, commented:

‘My expectation is that the RBA will not rush into another rate rise in December but instead assess inflation and growth trends over the next few months’.

Further denting the ‘Aussie’ today is China’s trade data, due to AUD’s position as a proxy currency for the Chinese economy. October’s data came in well below forecasts, showing a significant narrowing in China’s trade surplus. As the Chinese economy is heavily export driven, a decline in this area is serving to advance the Australian Dollar’s losses today.

Pound (GBP) Muted amid Data Lull

The Pound (GBP) is wavering this morning amid cautious trade and a lack of fresh UK data.

Sterling is catching bids against riskier currencies as anxious trade sweeps across global markets, though is ultimately struggling against its safer peers.

GBP’s recent gains seem to have levelled off this morning, as the Pound is once again left vulnerable to the UK’s bleak economic outlook in the absence of data.

Concerns that the UK’s looming GDP data will add to ongoing recession fears appear to be discouraging investors from placing aggressive bets on Sterling today.

The Bank of England asserted domestic concerns this week, stating that:

‘UK economic growth is slowing’.

Ultimately, the Pound may continue to firm against AUD today as RBA rate hike bets wane, though a bleak economic outlook could dent GBP as the session continues.

Pound Australian Dollar Exchange Rate Forecast: Chinese Data to Drive AUD Movement?

Looking ahead, China’s key data releases could impact the Australian Dollar’s movement in the coming days.

Economists forecast that Chinese inflation is due to have turned negative in October’s data, due for release on Thursday. Should the data report a decline from 0% to -0.1% in line with expectations, Chinese disinflation could drive economic slowdown worries, causing AUD to stumble.

The Australian Dollar may also remain vulnerable to market volatility following the RBA’s interest rate decision. AUD may face further selling pressure as investor responses unfold.

A lack of notable data in the coming days could leave GBP vulnerable to news about the British economic outlook ahead of the UK’s key GDP data on Friday. Investors may refrain from placing any hasty bets ahead of vital economic releases.

Yasmine Arasteh

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