The Pound-Australian Dollar could recover if UK inflation revives BoE rate hike bets, while softer Australian wage growth may weigh on the Aussie.
The Pound to Australian Dollar (GBP/AUD) exchange rate was subdued on Tuesday as markets digested the UK’s latest employment figures.
At the time of writing, GBP/AUD was trading at AU$1.9045. Down slightly from the start of Tuesday’s opening levels.
Pound to Australian Dollar (GBP/AUD): 1.9045 (-0.05%)
DAILY RECAP:
The Pound (GBP) faced headwinds on Tuesday, as the UK’s latest jobs report raised concerns over the strength of the UK labour market.
According to data published by the Office for National Statistics (ONS), the UK’s unemployment rate held at 4.9% in June, above forecasts it would drop to 4.8% as the UK economy added almost half the number jobs added in May.
The accompanying wage growth figures also sapped Sterling sentiment as average earnings slowed from 4.4% to 4.1%.
The soft employment data, particularly the slowdown in wage growth, came as a disappointment to GBP investors as it underpins expectations the Bank of England’s (BoE) may sit out the current hiking cycle.
The Australian Dollar (AUD) fluctuated on Tuesday, amid shifting risk sentiment and upbeat domestic data.
AUD exchange rates initially firmed through Tuesday’s Asian trading session, after Australian consumer confidence improved more than expected this month and even stuck its highest level since March.
However, the ‘Aussie’ was forced to relinquish the bulk of these gains by the start of the European session, with the high-yield currency struggling to sustain its support as rising energy prices and geopolitical uncertainty sapped market risk sentiment.
Near-Term GBP/AUD Forecast: Rising Inflation to Revive Sterling?
Looking ahead to the middle of the week, the Pound Australian Dollar exchange rate may catch bids with the release of the UK’s consumer price index.
July’s CPI figures are forecast to report inflationary pressures began to build again in July, after previously easing for three consecutive months.
This could push Sterling higher if it keeps hopes alive for a BoE rate hike before the end of 2026.
In the meantime, the release of Australia’s latest wage price index could dent the ‘Aussie’ if a moderation of wage growth in the second quarter is seen as weakening the case for further interest rate hikes from the Reserve Bank of Australia (RBA).
Our currency coverage draws on live market data, official economic releases and published bank research.
