Pound Australian dollar (GBP/AUD) exchange rate ticks up despite June rate cut bets
The Pound Australian dollar (GBP/AUD) exchange rate is drifting higher this morning despite some dovish commentary from the Bank of England’s (BoE) Governor Andrew Bailey.
At the time of writing the GBP/AUD exchange rate is trading at $1.9329, up roughly 0.3% from this morning’s opening rate.
Pound (GBP) weakens following BoE commentary
Although up against the Australian dollar (AUD), the pound (GBP) is facing headwinds against the majority of its other peers this morning.
In the aftermath of the BoE’s latest interest rate decision, where an increasingly dovish voting split led markets to speculate that the central bank could begin loosening its monetary policy earlier than expected, come additional comments from the BoE’s Governor Andrew Bailey.
Bailey expressed that interest rate cuts are now ‘in play’ at future BoE meetings, which prompted markets to raise their bets on a June rate cut.
Gabriella Dickens, G7 Economist at AXA Investment Managers, predicts:
‘A decision of when to ease will be finely balanced between June and August, but on balance we now see the first move as more likely in June. We continue to expect two further 25 basis points (bps) cuts in November and December.’
Further undermining Sterling sentiment this morning are the UK’s latest retail sales for February.
The data showed that retail sales volumes stagnated in February, slumping from January’s upwardly revised 3.6% figure.
Although this beat market expectations for a 0.3% contraction, the 0% reading is still deterring GBP investors this morning.
Australian dollar (AUD) plunges amid risk-off flows
The Australian Dollar is plummeting against the majority of its peers this morning, down by as much as 0.8% against some of its peers, due to this morning’s cautious trading session.
As the US dollar (USD) strengthens this morning, risk averse trade has swept the markets.
USD demand appears to have spiked in the wake of the Swiss National Bank’s (SNB) surprise interest rate cut on Thursday.
On the back of the Australian dollar’s position as a risk-sensitive currency, a souring market mood has damped demand for the ‘Aussie’, as investors bet on safer assets.
GBP/AUD exchange rate forecast: Australian data to undermine the Australian dollar?
Looking ahead, the likely catalyst of movement for the pound Australian dollar exchange rate at the start of next week will be several Australian data releases.
Monday will see the release of the latest domestic consumer inflation expectations.
Expected to slightly cool, should the data confirm consumer inflation expectations weakened from 4.5% to 4.4% in March, this could weigh on AUD exchange rates.
Also on Monday, the Westpac consumer confidence change for March is expected to show consumer confidence has largely diminished. Should the finalised data match expectations, this could also stymie the ‘Aussie’ at the start of next week.
Turning to the pound, a lack of macroeconomic data releases at the beginning of next week is likely to leave Sterling trading without a clear trajectory.