Pound Australian Dollar (GBP/AUD) exchange rate subdued amid absence of data
The Pound Australian Dollar (GBP/AUD) exchange rate is trapped in a narrow range this morning, as both UK and Australian economic data is in short supply.
At the time of writing the GBP/AUD exchange rate is trading at $1.9305, virtually unchanged from this morning’ s opening rate.
Australian Dollar (AUD) boosted by upbeat trade
The Australian Dollar (AUD) rose in overnight trade thanks to bullish trading conditions, however has remained mostly rangebound this morning, only slightly firming against its safer counterparts.
The upbeat mood appeared linked to a more positive outlook for the Chinese economy in the wake of stronger-than-expected trade figures published earlier in the week.
China’s trade surplus increased to $125.16 billion in January to February 2024, surpassing market expectations of $103.7 billion. Both Chinese imports and exports rose, by 3.5% and 7.1% respectively.
Also strengthening market sentiment are rising bets that the Federal Reserve may begin cutting interest rates from June.
Markets are hopeful that a drop in US interest rates will help to boost global growth.
Pound (GBP) rangebound amid lack of data
The Pound (GBP) is trading sideways against the majority of its peers this morning, amid an absence of market moving data.
Sterling sentiment is also limited amid renewed Bank of England (BoE) interest rate cut speculation.
GBP investors are growing increasingly confident that the BoE will deliver its first rate cut this summer.
This follows, the publication of the Office for Budget Responsibility’s (OBR) latest inflation forecasts, which released alongside Chancellor Jeremy Hunt’s Budget on Wednesday.
The OBR now predicts that UK inflation will fall below 2% within the next few months.
This is likely to increase pressure on the BoE to start loosening its monetary policy and help the UK economy to bounce back from last year’s recession.
GBP/AUD exchange rate forecast: Chinese inflation to buoy Australian Dollar?
Looking ahead, the likely catalyst of movement for the Pound Australian Dollar exchange rate at the start of next week will be the latest Chinese inflation data. Due to the Australian Dollar’s status as a proxy currency for the Chinese economy, upbeat data from the economic superpower can bolster the ‘Aussie’.
Chinese headline inflation is forecast to have risen by 0.3% in February, up from a previous reading of -0.8%, which saw China’s consumer prices fall at their fastest pace in more than 14 years.
Relief that China has pulled itself out of its deflation slump could help to bolster AUD exchange rates.
Turning to the Pound, the primary driver of movement for the Pound will likely be the release of the UK’s latest GDP reading.
Scheduled for Wednesday, January’s data is expected to confirm that the British economy grew by 0.2% in its month-on-month reading, rising from December’s 0.1% contraction.
Should the data match expectations, this may help alleviate current fears surrounding the UK economy, and in turn bolster Sterling in mid-week trade.