Pound Australian Dollar (GBP/AUD) Exchange Rate Dented Following Upbeat Aus Data
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The Pound Australian Dollar (GBP/AUD) exchange rate drifted lower on Thursday following some better-than-expected Australian data.
At the time of writing the GBP/AUD was trading at around AU$1.9220, down roughly 0.2% from Thursday’s opening rate.
Australian Dollar (AUD) Firms Following Consumer Inflation Expectations
The Australian Dollar (AUD) strengthened on Thursday against the majority of its peers following the release of some positive economic data.
The latest domestic consumer inflation expectations for April surprised to the upside, coming it at 4.6% rather than a more modest estimate of 4.1%, and surpassed last month’s reading of 4.3%.
This better-than-expected reading lent AUD exchange rates some modest support and was able to see the ‘Aussie’ firm against most of its rivals.
Pound (GBP) Muted despite Hawkish BoE Comments
The Pound (GBP) was trapped in a narrow range against the majority of its counterparts on Thursday despite some hawkish remarks from Bank of England (BoE) external monetary policy member, Megan Greene.
Following the latest US inflation data that saw the US dollar (USD) surge on Wednesday thanks to delayed interest rate cut bets, Greene also argued that rate cuts in the UK are still ‘a way off’.
Greene explained: ‘There has been encouraging news on UK wage growth and services inflation in recent months. The risk of inflation persistence is diminishing as these indicators come down in line with the MPC’s forecast. But they remain higher than in other advanced economies, particularly the US. Momentum in the markets has been towards pricing in later rate cuts by the Fed as economic growth remains robust. In my view, rate cuts in the UK should still be a way off as well.’ She continued on to discuss inflation, explaining: ‘Higher inflation expectations have translated into higher pay growth, by some metrics now between 6-7 per cent in the UK versus 4-5.5 per cent in the US. Such sticky wage growth is a significant component of services inflation. It will need to slow further to see services inflation return sustainably to target-consistent levels. This last mile may prove the hardest. UK services inflation remains much higher than in the US.’
Since Wednesday, the US FedWatch Tool is now pricing in a primary rate cut in September rather than June.
However, despite the BoE’s comparative comments, Sterling sentiment remained subdued throughout Thursday’s European session.
GBP/AUD Forecast: UK GDP to Dent the Pound?
Looking ahead, the primary catalyst of movement for the Pound Australian Dollar exchange rate for the remainder of this week is likely to be the UK’s latest GDP figure.
Scheduled for release on Friday, the data is expected to report a 0.1% increase following a previous reading of 0.2%.
This could see Sterling sentiment sapped at the end of this week should the data confirm that UK economic growth slowed to a crawl in February.
Elsewhere, the Pound Australian Dollar exchange rate could be driven by shifts in risk appetite.
As the more risk-sensitive currency, should markets enter into upbeat trading conditions, the Australian Dollar could rise against the Pound towards the end of the week.
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