Pound Australian dollar (GBP/AUD) exchange rate slips following Australian inflation data
The pound Australian dollar (GBP/AUD) exchange rate is ticking lower this morning following the publication of Australia’s latest consumer price index (CPI) indicator.
At the time of writing the GBP/AUD exchange rate is trading at $1.9462, down roughly 0.3% from this morning’s rate.
Australian dollar (AUD) buoyed by inflation data
The Australian dollar (AUD) is ticking up against the majority of its peers this morning following the overnight publication of Australia’s monthly CPI indictor.
The latest indicator once again came in hotter-than-expected in July and fell from 3.8% to 3.5% rather than falling further to 3.4% as expected.
The survey, produced by the Australian Bureau of Statistics (ABS), confirmed the lowest reading since March, dampening any Reserve Bank of Australia interest rate cut bets and in turn lifting AUD exchange rates.
The low inflation reading was largely put down to the Australian governments ‘responsible cost of living relief’, as ABS Treasurer Jim Chalmers explains:
‘Rents increased 6.9 per cent in the year to July but without our largest increase to Rent Assistance in 30 years, they would have increased 8.8 per cent. Australia’s peak energy user group, and one of its biggest retailers, sound the alarm on complex power prices. Electricity prices fell 5.1 per cent in the year to July which is more than they would have fallen without the energy relief we are rolling out with the states. Without our rebates, they would have fallen 2.3 per cent in the year to July.’
Pound (GBP) undermined by economic concerns
The pound (GBP) is struggling to attract investor attention this morning, and is slipping against the majority of its peers, as concerns over the UK’s economy have seen Sterling struggle to catch bids.
Following a speech from the UK Prime Minister yesterday, where Starmer warned of ‘painful’ upcoming UK budget, fears over the overall health of the UK economy have deterred investors thus far.
Starmer explained:
‘I will be honest with you, there is a budget coming in October and it’s going to be painful. Just as when I responded to the riots, I’ll have to turn to the country and make big asks of you to accept short-term pain for long-term good. The difficult trade-off for the genuine solution.’
GBP/AUD exchange rate forecast: Australian data in the spotlight?
Looking ahead, the primary catalyst of movement for the pound Australian dollar exchange rate this week will likely be the publication of Australia’s latest retail sales data.
Scheduled for release on Friday, July’s monthly figure is forecast to fall from a previous reading of 0.5% down to 0.3%.
Should the data print as expected and show a slowdown in consumer spending, could this be enough to see AUD close the week on the back foot?
Turning to the pound, UK data will be few and far between for the remainder of this week, which will likely leave Sterling trading in line with risk dynamics.