Pound Australian dollar (GBP/AUD) exchange rate rangebound following RBA interest rate hold
The pound Australian dollar (GBP/AUD) exchange rate is trading sideways today following the overnight publication of the Reserve Bank of Australia’s (RBA) latest interest rate decision.
At the time of writing the GBP/AUD exchange rate is trading at $1.9561, virtually unchanged from thus morning’s opening rate.
Australian dollar (AUD) mixed following RBA rate decision
The Australian dollar (AUD) was initially buoyed in overnight trade as the Reserve Bank of Australia enacted an interest rate hold at its latest meeting.
The decision initially bolstered the Australian currency, before a speech from RBA’s Governor Michele Bullock tempered with the ‘Aussie’s’ trade.
Bullock explained that the central bank had ‘not discussed a rate hike’ during its overnight meeting, which had been quietly anticipated as an option by some economists in recent weeks.
Bullock said:
‘We didn’t explicitly consider an interest rate rise at this meeting. The format of the meeting was slightly different. The way we framed the discussion really was around what had changed since August, and what would we need to see to go either a raise in interest rates or a lowering in interest rates? So there wasn’t an explicit alternative in the sense that I’ve talked about in the past.’
Pound (GBP) undermined by BoE comments
The pound (GBP) is struggling to garner investor attention this morning as an absence of UK data sees Sterling struggle to find a clear trajectory.
Further hobbling GBP exchange rates this morning is the latest commentary from the Bank of England (BoE) Governor Andrew Bailey.
Just a week after the BoE enacted a widely expected interest rate hold, Bailey has warned that UK interest rates are ‘gradually heading downwards’ in an interview published earlier this morning.
Bailey explained:
‘I do think the path for interest rates will be downwards, gradually. Inflation has come down a long way.
We still have to get it sustainably at the target and we have quite an unbalanced mix of components of inflation at the moment.’
This, alongside a lack of further economic drivers, has seen Sterling sentiment remain on the back foot moving into Tuesday’s European session.
GBP/AUD exchange rate forecast: Australian data to remain in the spotlight?
Looking ahead, the primary catalyst of movement for the pound Australian dollar exchange rate looking at tomorrow will likely continue to be economic data released from Australia.
Australia is set to publish its latest monthly CPI indicator tomorrow, which is forecast to plumet from 3.5% to 3.1%, and reflect a fresh three-year low.
Should the data print as expected and confirm a significant downturn in Australia’s CPI indicator last month, AUD could experience fresh headwinds during mid-week trade.
Turning to the pound, UK data will remain thin on the ground moving into mid-week trade, which could continue to see GBP exchange rates trade without a clear direction.