The Pound-Australian Dollar rate could remain supported if risk appetite deteriorates, while caution ahead of key BoE speeches may limit Sterling’s upside.
The Pound to Australian Dollar (GBP/AUD) exchange rate was steady on Tuesday
At the time of writing, GBP/AUD was trading at AU$1.8972. Virtually unchanged from the start of Tuesday’s European session.
Pound to Dollar (GBP/USD): 1.327225 (+0.40%)
Australian Dollar to Dollar (AUD/USD): 0.698265 (+0.22%)
DAILY RECAP:
The Australian Dollar (AUD) fluctuated on Tuesday, following another sharp deterioration in domestic consumer confidence.
The Westpac–Melbourne Institute Consumer Sentiment Index fell 4.7% in October to 80.4, marking its second consecutive monthly decline and leaving sentiment among the weakest readings recorded since the survey began in the early 1970s.
The deterioration in confidence followed last week’s Reserve Bank of Australia (RBA) rate hike, with the survey showing a particularly pronounced drop in sentiment among respondents questioned after the decision.
However, broader currency dynamics helped to partially offset these domestic headwinds, with a modest pullback in the US Dollar (USD) offering some support for risk-sensitive currencies.
The Pound (GBP) traded sideways on Tuesday morning, with a relatively quiet UK economic calendar leaving Sterling looking for fresh direction.
Attention was instead turning towards a scheduled appearance from Bank of England (BoE) policymaker Catherine Mann, with investors keen to assess whether the traditionally hawkish MPC member would reinforce expectations of further monetary tightening.
Mann was one of three policymakers to vote for a 25bps interest rate hike at the bank’s September meeting, and her comments could strengthen Sterling sentiment if she signals support for a hike in November.
Near-Term GBP/AUD Forecast: Strong Inflation to Lift the ‘Aussie’?
Looking ahead to the middle of the week, in the absence of any notable UK or Australian data, movement in the Pound to Australian Dollar exchange rate is likely to be dictated by wider market trends.
Of the two, the ‘Aussie’ is likely to prove the more sensitive to any shifts in market risk appetite, with AUD likely to give up ground if sentiment remains broadly downbeat.
Meanwhile, a gloomy mood may also temper GBP demand, while caution ahead of speeches by several BoE policymakers – including Governor Andrew Bailey – on Thursday may also cap Sterling.
Our currency coverage draws on live market data, official economic releases and published bank research.
