Pound Australian Dollar (GBP/AUD) exchange rate teeters near weekly high
The pound Australian dollar (GBP/AUD) exchange rate is holding at a one-week high this morning, following the publication of better-than-expected UK GDP data.
At the time of writing the GBP/AUD exchange rate is trading at $1.9048, virtually unchanged from this morning’s opening rate.
Pound (GBP) supported by UK GDP
The pound (GBP) is holding steady against the majority of its peers this morning after the UK’s latest GDP reading surpassed expectations.
The Office for National Statistics (ONS) reported the UK economy grew by 0.4% in May, beating forecasts for a 0.2% expansion.
The larger-than-expected uptick in growth was attributed to strong services activity and an increase in construction output, and is underpinning GBP exchange rates this morning
Sanjay Raja, Chief UK Economist of Deutsche Bank commented:
‘While the warmest May on record may have helped activity in the services and construction sectors, UK GDP is now undeniably picking up steam. The short-lived recession is now very much behind us. It’s now likely that Q2 growth could come close to the mark set in Q1 (our current nowcast models point to a 0.6% quarter-on-quarter reading with risks skewed to the upside).’
Australian dollar (AUD) unmoved by inflation expectations
The Australian dollar (AUD) is treading water against the majority of its peers this morning following the publication of Australia’s latest consumer inflation expectations survey.
Inflation expectations fell from 4.4% to 4.3% in July, striking its lowest levels since May.
However, July’s data highlighted concerns over persistent services inflation, which helped the ‘Aussie’ hold its ground in the wake of the release.
GBP/AUD exchange rate forecast: US CPI to drive movement?
Looking ahead, the pound Australian dollar exchange rate could be infused with some volatility in the second half of today’s European session, with the release of the latest US consumer price index.
This data could have a big impact on market sentiment moving forward, as it could cement expectations the Federal Reserve will cut interest rates in September.
Bets for a US interest rate cut may improve market risk appetite and help to underpin AUD exchange rates.
Looking ahead to tomorrow, AUD investors may cast their eye to the latest Chinese trade data. As Australia’s largest export market, will a rebound in Chinese import growth reflect positively on the ‘Aussie’.
Turning to the pound, domestic data is scarce for the remainder of the week which may see Sterling struggle to find a clear trajectory.
However, as an increasingly risk-sensitive currency, could any shifts in market appetite also see the Pound fluctuate?