Pound Australian Dollar (GBP/AUD) exchange rate buoyed by risk-off flows
The Pound Australian Dollar (GBP/AUD) exchange rate is drifting higher this morning amid a downbeat market mood.
At the time of writing the GBP/AUD exchange rate is trading at $1.9424, up roughly 0.3% from this morning’s opening rate.
Australian Dollar (AUD) slips amid negative trading conditions
The Australian Dollar (AUD) is softening against the majority of its peers this morning as the risk-sensitive currency is undermined by souring trading conditions.
Following a slew of mixed data releases from China last night, markets have been betting on safer assets in today’s European session.
Additionally, thanks to the Australian Dollar’s status as a Chinese proxy currency, the mixed data has further stymied AUD exchange rates this morning.
The ‘Aussie’ will likely continue to lose ground against its counterparts should this morning’s risk averse trade prevail.
The ‘Aussie’ may extend this slide into the weekend, if market risk appetite continues to deteriorate following the release of US data later this afternoon.
Pound (GBP) muted amid lull in data
The Pound (GBP) is trending mostly flat against its peers this morning, rising against its riskier peers but wavering elsewhere, as an absence of UK macroeconomic data leaves the currency directionless.
Investor focus will likely shift to next week’s Bank of England (BoE) interest rate decision, on the back of recent speculation that the central bank is likely to ‘keep rates higher for longer.’
With current predictions that the central bank will not begin loosening its monetary policy until August, any dovish rhetoric from policymakers during Thursday’s decision and accompanying press release could see GBP exchange rates fall.
GBP/AUD exchange rate forecast: interest rate decisions to drive GBP and AUD movement?
Looking ahead, the likely catalyst of movement for the Pound Australian Dollar exchange rate next week is likely to be both the Reserve Bank of Australia’s (RBA) and the BoE’s upcoming interest rate decisions, scheduled for release on Tuesday and Thursday respectively.
With both central banks expected to leave rates on hold, GBP and AUD investors will likely turn to the accompanying commentary for guidance.
Any dovish comments from either side could infuse volatility in GBP/AUD exchange rates moving into next week.
Before the RBA’s decision on Tuesday, Monday will see the release of the latest Australian consumer inflation expectations.
Forecast to slightly ease, should the data confirm expectations decreased from 4.5% to 4.4% in March, this may hobble the ‘Aussie’ at the start of next week.
Turning to the Pound, before the BoE delivers its interest rate decision on Thursday, the UK’s latest inflation data is scheduled for release.
In recent weeks, the Office for Budget Responsibility (OBR) has predicted that UK inflation is set to fall to 2% in the second quarter. Any sign that the pace at which inflation is cooling is beginning to accelerate could trigger a sharp drop in the Pound.