The Pound-Australian Dollar could stay under pressure if UK borrowing rises, while persistent RBA hike bets may continue to support the Aussie.
The Pound Australian Dollar (GBP/AUD) exchange rate slipped slightly on Monday as hawkish Reserve Bank of Australia (RBA) bets continued to underpin the ‘Aussie’.
At the time of writing, GBP/AUD was trading at AU$1.8769, down almost 0.2% on the session.
Pound to Dollar (GBP/USD): 1.337753 (-0.13%)
Australian Dollar to Dollar (AUD/USD): 0.712665 (+0.02%)
DAILY RECAP:
The Australian Dollar (AUD) ticked higher during Monday’s Asian trading session, as markets continued to bet on further monetary tightening from the Reserve Bank of Australia.
This followed hawkish comments from RBA Governor Michele Bullock on Friday, in which she warned that the risk of rising inflation may prompt the central bank to hike interest rates again.
However, while RBA bets lifted AUD, a risk-off tone limited the risk-sensitive currency’s potential. Escalating tensions in the Middle East darkened the market mood.
Meanwhile, the Pound (GBP) was subdued on Monday as a lack of UK economic data left Sterling without a clear directional bias.
GBP was still somewhat muted after last week’s Bank of England (BoE) decision, in which the bank held rates but slowed the pace of bond sales, leading to some losses in Sterling.
Near-Term GBP/AUD Forecast: Rising Borrowing Costs to Dent the Pound?
Looking ahead, new UK data could influence Sterling on Tuesday, with GBP investors likely first focusing on the British government’s borrowing figures. A jump in borrowing in August could weigh on the Pound, as it would likely raise concerns about the state of the public finances ahead of the Autumn Budget.
GBP may face further pressure later on with the publication of the Confederation of British Industry’s (CBI) industrial trends orders. A deeper decline in industrial orders may dent the Pound.
As for the ‘Aussie’, risk sentiment could drive the currency amid a lack of Australian economic data. Could a souring mood dampen demand for AUD?
Our currency coverage draws on live market data, official economic releases and published bank research.
