Pound Australian dollar (GBP/AUD) exchange rate dips amid rising commodity prices
(Article updated 16:30, 14/06/2024) The pound Australian dollar (GBP/AUD) exchange rate is edging lower this afternoon, as risk-averse trade and hawkish Reserve Bank of Australia (RBA) rhetoric drive movement in the currency pairing.
Weakened during the afternoon, as a gloomy market sentiment permeated global trade.
The acutely risk-sensitive Australian dollar (AUD) weakened during the afternoon, as a gloomy market sentiment permeated global trade.
However, AUD’s losses were seemingly cushioned by deferred RBA rate cut bets, with markets pricing in no monetary unwinding until the final quarter of the year.
Andrew Ticehurst, senior economist at Nomura.
‘The risk of a rate hike is very low, but the RBA’s response to high inflation data would be to keep current high rates for longer.’
Looking to the pound (GBP) a data-light end to the week and a lack of wider impetus left Sterling rudderless against its rivals, with nothing to cushion the increasingly risk-sensitive currency’s losses.
At the time of writing, GBP/AUD is trading at around AU$1.9174, down 0.3% from the morning’s opening levels.
Original article continues below:
Pound Australian dollar exchange fluctuates amid lack of data
The Pound Australian dollar (GBP/AUD) exchange rate is changeable this morning amid a data-light end to the week.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9240, virtually unchanged from this morning’s opening rate.
Australian dollar (AUD) buoyed by deferred RBA rate cut bets
The Australian dollar is fluctuating this morning amid a lack of macroeconomic releases.
With fresh data in short-supply, reduced Reserve Bank of Australia (RBA) interest rate cut speculations serve to keep the ‘Aussie’ afloat.
According to a poll by Reuters, economists expect the RBA to leave interest rates unchanged at 4.35% for a fifth consecutive time next week. A majority anticipate the central bank’s first rate reduction will occur during the final quarter of 2024.
Andrew Ticehurst, Senior Economist at Nomura, said:
‘Growth is soft, unemployment should rise over coming months and wage growth has likely peaked. As this happens, we think the RBA will become more confident inflation, including services inflation, will slow…and will allow a gentle easing cycle to commence around November.’
With domestic inflation persistently remaining above the central bank’s 2% target rate and softening AU unemployment, the RBA may continue to comfortably hold its base rate in the coming months, with such expectations underpinning AUD so far today.
Pound (GBP) subdued amid data lull
The pound (GBP) is trading sideways this morning as UK data runs thin on the ground.
Amid an ongoing data lull, GBP is seemingly buoyed by dialled back Bank of England (BoE) interest rate cut expectations, much like its ‘Aussie’ counterpart.
As UK Prime Minister Rishi Sunak’s snap election looms, economists argue that the British CPI remains too high for the central bank to enact any monetary unwinding in its upcoming meeting next week, shattering hopes of a June interest rate cut.
Peter Dixon, Head of EMEA Country Research with Fitch Solutions, said:
‘They can afford to wait. The ECB has acted but globally the environment suggests the Bank can wait a little longer. Six weeks isn’t going to hurt.’
Furthermore, both wage and services inflation, important factors for the BoE, have persistently printed at around 6%. This reinforces market expectations that the central bank will delay monetary loosening until August, while others anticipate a September rate cut.
Thin trading conditions may see GBP ultimately trade sideways as the session progresses, with Sterling unable to find a clear direction in the meantime.
Pound Australian dollar exchange rate forecast: upbeat trade to underpin AUD?
Looking ahead, a data-light end to the week could see the pound Australian dollar exchange rate left vulnerable to market risk dynamics. Investors may favour the acutely risk-sensitive ‘Aussie’, should bullish sentiment permeate global markets.
Alternatively, any gloomy trading conditions could see the less risky pound take precedent, while faltering against its safe-haven rivals.
Elsewhere, shifting interest rate expectation may continue to drive movement for each respective currency. Should markets continue to defer their RBA interest rate cut bets, AUD could garner investor support. Similarly, any further push back against imminent BoE monetary unwinding could boost Sterling sentiment.