GBP Slides As Sticky Inflation Fuels RBA Hawkish Bets

The Pound to Australian Dollar (GBP/AUD) exchange rate came under pressure on Wednesday, briefly slipping to a new ten-month low as sticky Australian inflation data supported the ‘Aussie’.

DAILY RECAP:

The Pound to Australian Dollar (GBP/AUD) exchange rate came under pressure on Wednesday, with the pairing striking a new ten-month low before clawing back some of these losses.

At the time of writing, GBP/AUD was trading at AU$2.0011, down almost 0.2% on the day, but having rebounded from a low of AU$1.9969 struck in overnight trade.

The Australian Dollar (AUD) surged during the Asian session following the release of Australia’s latest monthly inflation figures. While headline CPI cooled from 3.8% to 3.4% year-on-year in November, this was still firmer than expected.

More importantly for markets, the Reserve Bank of Australia’s preferred trimmed-mean measure proved far stickier, easing only slightly from 3.3% to 3.2%. This reinforced speculation that the RBA could still consider another rate hike during its current cycle.

The hawkish inflation signal was enough to support the ‘Aussie’ despite a cautious broader market mood that saw investors largely avoid risk-sensitive assets.

Meanwhile, the Pound (GBP) traded without a clear direction on Wednesday amid a lack of domestic catalysts.

Sterling sentiment was instead tied to wider market developments, including rising geopolitical uncertainty linked to US territorial rhetoric over Greenland. Concerns that tensions between NATO members could escalate weighed on overall risk appetite and left GBP muted.

Near-Term GBP/AUD Forecast: Australian Trade Data to Support the ‘Aussie’?

Looking ahead, the next catalyst for movement in the Pound Australian Dollar exchange rate is likely to be Australia’s latest trade balance figures.

Economists expect the country’s trade surplus to have widened again in November, potentially driven by resilient export growth. If confirmed, this could provide further support for the Australian Dollar.

In contrast, with UK economic data absent from the calendar, the Pound may struggle to find a clear directional driver through the remainder of the week.