Pound Australian dollar (GBP/AUD) exchange rate wavers amid data lull
(Article updated 15:30, 14/06/2024) The pound Australian dollar (GBP/AUD) exchange rate recouped some of its losses this afternoon amid a souring market sentiment.
The acutely risk-sensitive Australian dollar (AUD) retreated from its previous gains heading into the latter part of the session, as escalating geopolitical tensions saw investors favouring safer currencies in its place.
Elsewhere, speculation that the Bank of England (BoE) could delay its monetary unwinding cycle until the end of the third quarter lent the pound (GBP) modest support against its ‘Aussie’ counterpart.
Looking ahead, Australia’s latest inflation gauge is due for release overnight. Could signs of an easing consumer price index (CPI) pressure AUD?
At the time of writing, GBP/AUD is trading at around AU$1.9628, virtually unchanged from this morning’s opening levels.
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Pound Australian dollar (GBP/AUD) loses ground amid lack of data
The pound Australian dollar (GBP/AUD) exchange rate is losing ground this morning amid shifting interest rate cut speculations.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9614, down approximately 0.2% from this morning’s opening rate.
Pound (GBP) stumbles ahead of BoE meeting
The pound (GBP) is trading without a clear direction this morning amid a lack of fresh UK releases.
With the Bank of England (BoE) due to deliver its latest interest rate decision on Thursday afternoon, GBP may struggle to find a clear direction in the meantime.
Investors and economists alike remain largely divided in their interest rate cut expectations, with markets near split as to whether the BoE will deliver a rate cut in August or continue to defer until September.
Ruth Gregoy, Deputy Chief UK economist at Capital Economics said:
‘The economy’s recent strength and the stickiness of services inflation leads us to think that the Bank of England will wait until its September meeting to cut interest rate.’
However, with the odds of an August rate cut hovering close to 50%, GBP will likely remain subdued ahead of the central bank’s market-moving meeting tomorrow.
Furthermore, investors will be eager to analyse the BoE’s forward guidance, in order to better gauge current policymaker consensus. Any dovish tilt may see GBP tumble against its rivals.
Australian dollar (AUD) ticks up ahead of inflation release
The Australian dollar is edging higher this morning ahead of the latest domestic inflation gauge, due for release overnight.
As markets brace for the upcoming consumer price index indicator, AUD’s upside potential could remain limited, as investors continue to mull over the likelihood of further monetary tightening from the Reserve Bank of Australia (RBA).
However, with other major central bank’s leaning dovish in recent weeks, such signals could prevent the RBA from maintaining a hawkish outlook, in spite of stubborn AU inflation.
Prashant Newnaha, Senior Rates Strategist at TD Securities, said:
‘With China easing and the risk of the Fed and other developed market central banks easing on the horizon, the RBA is highly cognisant of fine-tuning monetary policy when the pulse is shifting to the downside.’
Meanwhile, an increasing appetite for risk lends AUD additional support due to its risk-sensitive status, while increasing coal prices further underpin the commodity-linked ‘Aussie’.
Pound Australian dollar exchange rate forecast: Australian inflation in focus
Looking ahead, Australia’s monthly consumer price index indicator is due for release overnight. The index is due to print at 3.8% in June, easing from 4% in May. Should the gauge print as expected, further signs of easing Australian inflation could bolster the case for looser monetary policy by the RBA in the coming months.
For the pound, investor interest could remain largely muted ahead of the Bank of England’s (BoE) looming monetary policy decision, due to take place on Thursday. With markets still split over whether the central bank will begin its unwinding cycle this week, GBP could waver as investors remain reluctant to place any aggressive bets on Sterling.
Elsewhere, the pound Australian dollar exchange rate could be left vulnerable to global market dynamics. Any bullish trade could lift the acutely risk-sensitive ‘Aussie’ against its rivals. Alternatively, gloomy trading conditions could see GBP take precedent.