Pound Australian dollar (GBP/AUD) exchange rate rises amid downbeat trade
Article updated 16:18, 20/5/2024
The pound Australian dollar (GBP/AUD) exchange rate is rising this afternoon, as a downbeat market mood weighs on AUD exchange rates.
Due to its acutely risk-sensitive nature, the ‘Aussie’ is weakening against its peers. Markets have begun to favour safer assets over the course of the European session.
However, the morning’s dovish remarks from Bank of England (BoE) Deputy Governor Ben Broadbent may be capping the pound’s gains.
At the time of writing, GBP/AUD is trading at around AU$1.9031, an increase of just under 0.3% from today’s opening rates.
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Pound Australian dollar exchange rate muted amid dovish BoE comments
The pound Australian dollar exchange rate is rangebound today, following dovish comments from Bank of England (BoE) Deputy Governor Ben Broadbent.
At the time of writing, GBP/AUD is trading at around AU$1.8977, showing little movement from today’s opening rates.
Pound (GBP) wobbles amid dovish BoE remarks
The pound (GBP) is wavering this morning, in the wake of dovish comments from Bank of England Deputy Governor Ben Broadbent.
In a speech, Broadbent discussed how the UK economy has been subject to supply and costs shocks. He further reflected on the BoE’s path forward in terms of interest rates.
Broadbent stated that:
‘Whatever the priors of its individual members the MPC will continue to learn from the incoming data and, if things continue to evolve with its forecasts – forecasts that suggest policy will have to become less restrictive at some point – then it’s possible Bank Rate could be cut some time over the summer.’
Broadbent joins previous BoE comments by suggesting that rate cuts were coming sooner rather than later. Because of this, Sterling is struggling to find its footing against most peers.
Elsewhere, risk appetite is likely playing a role in shaping the pound this morning. Due to its increasingly risk-sensitive nature, the upbeat tone may be preventing GBP from slumping.
Australian dollar (AUD) muted amid light data calendar
The Australian dollar (AUD) is flat this morning, amid a lack of domestic macroeconomic data releases.
Furthermore, investors may be paying attention to the latest loan prime rate decisions from the People’s Bank of China (PBoC).
As expected, the PBoC kept the one- and five-year rates unchanged. However, investors still anticipate future cuts.
Analysts at ING commented:
‘Given the strength of the recent supportive policy rollout, the odds of further monetary policy easing in the coming months to support these efforts have risen.’
Elsewhere, risk-on trading conditions are likely keeping the ‘Aussie’ afloat, due to its acutely risk-sensitive nature.
Pound Australian dollar exchange rate forecast: UK CPI cooldown to dent GBP?
Looking ahead for the pound, the core catalyst of movement is likely to be the latest UK inflation data for April.
Headline inflation is expected to have cooled to 2.1%, which could weaken Sterling by cementing bets of a June rate cut. As this would bring the figure within touching distance of the BoE’s 2% remit, it may shift conversation to additional cuts thereafter, further denting Sterling.
This is preceded by a speech from BoE Governor Andrew Bailey. If Bailey strikes a dovish tone in his remarks, the pound may endure selling pressure.
For the Australian dollar, meanwhile, attention is likely to be on the latest Reserve Bank of Australia (RBA) minutes.
If these skew dovish, in line with recent communication, the ‘Aussie’ may weaken against its peers.
Elsewhere, risk appetite is likely to play a role in shaping the pairing. As AUD is more risk sensitive, bullish trade could lift it above the pound.