Pound Australian Dollar (GBP/AUD) exchange rate rangebound Following UK CPI
The Pound Australian Dollar (GBP/AUD) exchange rate is trapped in a narrow rage this morning following the release of the UK’s latest inflation data.
At the time of writing the GBP/AUD exchange rate is trading at $1.9483, virtually unchanged from this morning’s opening rate.
Pound (GBP) flat following inflation data
The Pound (GBP) is holding steady against the majority of its peers this morning following the release of the UK’s latest inflation data.
Both headline and core inflation cooled more than expected in the month of February.
Headline inflation printed at 3.4%, down from a previous reading of 4%, whilst core inflation came in at 4.5%, down from a previous figure of 5.1%.
The larger-than-forecast decline marked the lowest inflation level in two and a half years, and was primarily put down to a slowdown in the pace of food and restaurant prices.
As inflation falls closer to the Bank of England’s (BoE) 2% target, interest rate cut bets are ramping up.
Paul Dales, Chief UK Economist, explains:
‘Our view that inflation will fall below 2% in April and then ease towards 1% suggests the BoE may have to start cutting rates in the summer and reduce them to 3% next year. Accordingly, inflation is no more persistent than the BoE expected and is moving in line with the path that the BoE has hinted would warrant interest rate cuts.’
However, with GBP investors reluctant to alter their positions ahead of the BoE’s rate decision tomorrow, the downside in the Pound is limited today.
Australian Dollar (AUD) subdued in the aftermath of RBA decision
The Australian Dollar (AUD) is treading water this morning as ‘Aussie’ sentiment is still being undermined by the Reserve Bank of Australia’s (RBA) latest interest rate decision.
Although the RBA kept its cash rate unchanged at 4.35% on Tuesday, the accompanying forward guidance from policymakers has served to dampen AUD demand.
Pivoting on its previously hawkish stance surrounding a possible interest rate hike, the central bank’s focus had seemingly shifted instead towards loosening monetary policy, ultimately hobbling AUD exchange rates through to today.
Amid an absence of any macroeconomic data releases today, the Australian Dollar is likely to remain trapped in a narrow range.
GBP/AUD Exchange Rate Forecast: BoE interest rate decision to infuse volatility into the Pound?
Looking ahead, the primary driver of movement for the Pound Australian Dollar exchange rate on Thursday will undoubtedly be the BoE’s upcoming interest rate decision.
With the central bank expected to leave interest rates on hold at a 16-year high of 5.25% in March’s meeting, GBP investors will be focused on the central bank’s forward guidance.
Should the BoE push back on speculation that it could begin loosening its monetary policy in June, Sterling sentiment could be buoyed.
Turning to the Australian Dollar, the latest unemployment data is scheduled for release on Thursday. With unemployment expected to slightly decrease in February, down to 4% from 4.1%, this could lend AUD exchange rates some modest support should the data match expectations.