Pound Australian dollar (GBP/AUD) exchange rate muted following better-than-expected Australian data
The pound Australian dollar (GBP/AUD) exchange rate is trading sideways this morning despite the publication of Australia’s latest consumer confidence index.
At the time of writing the GBP/AUD exchange rate is trading at $1.9064, virtually unchanged from this morning’s opening levels.
Australian dollar (AUD) supported by consumer confidence index
The Australian dollar (AUD) is holding steady against the majority of its peers this morning following the publication of Australia’s latest consumer confidence index.
The Melbourne Institute Westpac consumer sentiment index rose to 83.6 in June, up from a previous reading of 82.2 in May and beat market expectations it would fall to 82.
However, despite June’s marginal uptick, the confidence index remained in pessimistic territory, (a score below 100) which saw any potential AUD gains capped.
This pessimism was linked to concerns over inflation and high interest rates and their impact on household spending power.
Westpac Senior Economist Matthew Hassan commented:
‘The survey detail suggests positives from fiscal support measures are being negated by increased concerns about inflation and the outlook for interest rates. The implication is that some consumer hopes of a more positive message on inflation and the interest rate outlook were again dashed.’
Pound (GBP) muted amid absence of data
The pound (GBP) is trading sideways against the majority of its peers this morning amid the continued absence of significant UK data.
Also limiting movement in GBP exchange rates is the UK’s upcoming general election. A widely expected Labour victory has been largely priced in, but GBP investors may be wary of any potential last-minute surprises.
With the Bank of England (BoE) observing a black out period just a week away from the vote, the Pound is likely to remain listless amid a period of limited data and forward guidance.
GBP/AUD exchange rate forecast: Australian CPI in focus?
Looking ahead, the primary driver of movement for the pound Australian dollar exchange rate this week will likely be the publication of Australia’s latest consumer price index.
Scheduled for release overnight, the latest monthly CPI indicator is forecast to report inflation accelerated in May.
With the Reserve Bank of Australia (RBA) signalling last week it is open to another interest rate hike, could we see the uptick in inflation bolster the ‘Aussie’?
Turning to the pound, the primary catalyst of movement will likely be some mid-tier domestic data, scheduled for release on Wednesday.
The data comes in the form of the Confederation of British Industry’s (CBI) latest distributive trades survey. The data is expected to show that retail sales slipped in June, with the index expected to fall from a previous reading of 8 down to 5.
A moderation of consumer spending could act as a headwind for the pound in the middle of the week.
Risk appetite could also impact the GBP/AUD exchange rate. A prevailing risk-on mood is likely to disproportionately benefit the Australian dollar.