Pound Australian Dollar (GBP/AUD) exchange rate rises as AU inflation misses forecasts
The Pound Australian Dollar (GBP/AUD) exchange rate is rallying this morning, as Australian inflation remains unchanged.
At the time of writing, GBP/AUD is trading at around AU$1.9474, an increase of just under 0.5% from today’s opening levels.
Australian Dollar (AUD) slumps as inflation misses forecasts
The Australian Dollar (AUD) is sliding this morning, following the latest monthly consumer price index reading.
February’s figure missed forecasts earlier today, with headline CPI holding at 3.4%. Markets were eyeing an increase to 3.6%, with the expectation that the Reserve Bank of Australia (RBA) would keep interest rates elevated.
With today’s data, the RBA I snow expected to cut rates beginning in August as inflation shows signs of moderating.
Marcel Theliant, Head of Asia Pacific at Capital Economics, commented:
‘The January data suggest that price pressures are likely to abate more rapidly than the RBA is expecting. Barring any unforeseen shocks, it seems increasingly likely that the CPI data will undershoot both of the bank’s projections.’
The data reaffirmed existing predictions that around 38bps of easing will be performed by the RBA by the end of 2024.
This, in tandem with a wavering market mood, is keeping AUD lowered at the start of today’s session.
Pound (GBP) wobbles ahead of BoE speech
The Pound (GBP) is trading in a mixed capacity this morning, as investors await the latest speech from Bank of England (BoE) policymaker Catherine Mann.
Mann is one of the more notably hawkish members of the Monetary Policy Committee, and may advocate for tighter policy. If she manages to do so successfully later today, the Pound could recover some of its losses.
Due to a lack of other data, Sterling is largely trading in line with market dynamics. While gaining ground against the Australian Dollar, GBP is losing out to safer assets.
As an increasingly risk-sensitive currency, the wavering market mood is undermining it as investors stick to safer assets.
Pound Australian Dollar exchange rate forecast: AU retail sales in focus
Looking ahead for the Australian Dollar, the core catalyst of movement is likely to be the latest retail sales data. In January, economists forecast that sales increased by 1.5%, following December’s -2.7% plunge.
This could lift the ‘Aussie’ by suggesting improving consumer spending, but as it may not be enough of a recovery any gains may be limited.
This is followed on Friday by the latest Chinese Caixin manufacturing PMI. Activity is forecast to have softened in February, which may weigh on AUD due to its nature as a Chinese proxy-currency.
For the Pound, data releases are few and far between through to the end of the week. However, Bank of England Chief Economist Huw Pill is due to deliver a speech on Friday.
If Pill strikes a hawkish tone, the Pound could gain ground against its peers as it may spark bets on delayed interest rate cuts.