Pound Australian Dollar (GBP/AUD) exchange rate ticks up amid cooling Australian inflation
The Pound Australian Dollar (GBP/AUD) exchange rate drifted higher this morning as overnight data reported that Australia’s monthly inflation gauge came in lower than expected.
At the time of writing the GBP/AUD exchange rate is trading at $1.9431, up roughly 0.3% from this morning’s opening rate.
Australian Dollar (AUD) dips as inflation cools
The Australian Dollar (AUD) is subdued this morning following the Melbourne Institute’s latest Monthly Inflation Gauge.
The index reported that inflation in February fell by 0.1% after rising by 0.3% in the previous month, and marked the first decline since October 2023.
This tempered demand for the Australian Dollar’s, however better than expected corporate profits in the fourth quarter of 2023 helped to limit AUD’s losses.
Corporate profits in Australia increased by 7.4% in the fourth quarter of 2023, well above market expectations of a more modest 1.8% rise, and surged above a downwardly revised 1.6% contraction in the third quarter of 2023. The data confirmed the strongest growth level since Q1 of 2022.
Pound (GBP) wavers ahead of Spring Budget
The Pound (GBP) is fluctuating this morning, rising against some of its more risk-sensitive peers but faltering elsewhere, as GBP investors await the highly anticipated UK Spring Budget for 2024.
Amid reports that UK Chancellor, Jeremy Hunt, has ‘less money to play around with’ that previously though, analysts are speculating on the size of his expected tax cuts.
Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, commented:
‘Speculation over what’s in and what’s out of Jeremy Hunt’s budget is reaching fever pitch, ahead of the big reveal on Wednesday. What appears clear is that the Chancellor has a lot less fiscal room to play with than he hoped, which is why he’s played down speculation about significant tax cuts.’
Some analysists predicted that the Pound could plunge as much as 2% should the Chancellor ‘get the Budget wrong’ on Wednesday, however Sterling could find firm if Hunt’s proposals for tax cuts are seen as boosting UK economic growth.
GBP/AUD exchange rate forecast: Australian GDP to buoy the Australian Dollar?
Looking ahead, the primary catalyst of movement for the Pound Australian Dollar exchange rate will likely be Australia’s latest GDP figure for the fourth quarter of 2023.
The Australian economy advanced by 0.2% in Q3 of 2023, and forecasters expect Q4’s figures to confirm another increase, of 0.3%.
Should the data print as expected, this may offer the ‘Aussie’ some support in mid-week trade.
Turning to the Pound, with a lack of economic data releases scheduled for tomorrow, Sterling’s movement may be limited ahead of the highly anticipated UK Spring Budget, expected on Wednesday.