Pound-Australian Dollar could stay under pressure if RBA hike bets strengthen, while caution ahead of the UK Budget may cap Sterling.
The Pound Australian Dollar (GBP/AUD) exchange rate touched an 11-day low on Monday as hawkish Reserve Bank of Australia (RBA) remarks boosted the ‘Aussie’.
At the time of writing, GBP/AUD was trading at AU$1.8984, having bounced off its low point of AU$1.8959 but still down on the day.
Pound to Dollar (GBP/USD): 1.335552 (-0.16%)
Australian Dollar to Dollar (AUD/USD): 0.70256 (-0.13%)
DAILY RECAP:
The Australian Dollar (AUD) attracted modest support during Monday’s Asian trading session as investors digested remarks from Reserve Bank of Australia Assistant Governor Sarah Hunter.
Hunter said that the RBA is ‘not quite yet’ done fighting inflation, hinting that the bank could raise interest rates further in the months ahead.
These hawkish comments helped to lift the Australian Dollar, as markets increased bets on more monetary tightening from the Reserve Bank of Australia.
Additionally, an upbeat market mood provided the risk-sensitive ‘Aussie’ with some support.
Meanwhile, the Pound (GBP) was somewhat subdued on Monday as GBP investors seemed reluctant to back the currency ahead of the UK’s Autumn Budget on Wednesday.
British Chancellor John Healey faces a challenging backdrop as he unveils his inaugural budget later in the week, navigating higher government borrowing costs, fragile UK growth, nervous bond markets and potentially rebellious backbenchers.
With the budget looming, GBP investors were waiting on the sidelines at the start of the week, leaving Sterling exposed to losses.
Near-Term GBP/AUD Forecast: Muted Movement as UK Budget Looms?
Looking ahead, movement may be muted on Tuesday amid a lack of impactful UK and Australian economic data.
Investors may opt to wait on the sidelines ahead of some significant events midweek. Both Australia’s latest inflation figures and the UK’s Autumn Budget are due on Wednesday, with the potential to drive volatility in the pairing. As a result, GBP/AUD may find itself confined to a narrow range on Tuesday.
Any movement will likely be driven by market risk sentiment. If the mood remains upbeat, the ‘Aussie’ could attract support.
Our currency coverage draws on live market data, official economic releases and published bank research.
