Pound Australian dollar (GBP/AUD) exchange rate teeters near three-month low
The pound Australian dollar (GBP/AUD) exchange rate is heading slight higher this morning after nearly hitting a three-month low during the overnight session.
At the time of writing the GBP/AUD exchange rate is trading at $1.9163, up around 0.2% from its overnight lows.
Australian dollar (AUD) undermined by Chinese data
The Australian dollar (AUD) is treading water against the majority of its peers this morning despite a clear upbeat market mood.
On the back of its position as a risk-sensitive currency, cheery trading conditions should lift AUD exchange rates.
However, following a statement from credit rating agency Fitch, who have cut the outlook on China’s debt, the ‘Aussie’ is struggling to attract support due to its status as a Chinese proxy currency.
Fitch’s statement highlighted the threats to China’s fiscal stability, including a rising deficit, and warned that growth will likely slow in the year that follows.
Dan Wang, Chief Economist of Hang Seng Bank China, commented:
‘With lagging private investment, state-backed funding has become even more important in driving growth, either in terms of infrastructure spending or in local government guidance funds for high tech industries.’
Pound (GBP) quiet amid lack of data
The pound (GBP) is trapped in a narrow range against the majority of its peers this morning as an absence of macroeconomic data releases has left Sterling struggling to find a clear direction.
As such, investors have turned their attention to ongoing Bank of England (BoE) interest rate cut speculation.
On the back of yesterday’s better-than-expected British Retail Consortium (BRC) index, which almost tripled from the previous reading, markets have been speculating on when the central bank will begin loosening its monetary policy.
Bets on a June interest rate cut are crystalising, which has weighed on the pound in recent days. Nevertheless, Sterling is managing to edge higher today, regaining ground after touching a three-month low against the ‘Aussie’ yesterday.
GBP/AUD exchange rate forecast: market mood to drive GBP and AUD movement?
Looking ahead, the primary catalyst of movement for the pound Australian dollar exchange rate for the majority of this week is likely to be market sentiment.
A key event that may impact market mood will be the US consumer price index, scheduled for release later today, where an expected uptick in American inflation could sour the market mood and therefore dent the Australian dollar.
Turning to the pound, the one data release of note this week that may influence GBP exchange rates is the UK’s latest GDP print for February, expected on Friday.
The data is forecast to report a 0.1% increase following a previous reading of 0.2%, which could see GBP exchange rates trade on the defensive at the end of the week should the data confirm that growth slowed to a crawl in February.