The Pound-Australian Dollar x-rate could stay under pressure if RBA hike bets persist, while Friday’s risk mood may decide whether the Aussie extends gains.
The Pound Australian Dollar (GBP/AUD) exchange rate struck a fresh two-month low on Thursday as hawkish Reserve Bank of Australia (RBA) expectations underpinned the ‘Aussie’.
At the time of writing, GBP/AUD was trading at AU$1.8907, close to a two-month low struck earlier in the session and down 0.2% on the day.
DAILY RECAP:
The Australian Dollar (AUD) enjoyed support on Thursday as markets continued to bet on further monetary tightening from the RBA following events earlier in the week.
A hawkish tilt to the central bank’s most recent meeting minutes was reinforced on Tuesday night as Australian inflation exceeded forecasts. Headline inflation eased less than expected in July, cooling from 3.8% to 3.5%, rather than 3.3%.
Meanwhile, the trimmed mean CPI – the RBA’s preferred indicator – held at 3.6%, rather than easing to 3.5%.
This prompted an increase in RBA interest rate hike bets, which continued to support the ‘Aussie’ into Thursday’s session.
Meanwhile, the Pound (GBP) struggled on Thursday as an ongoing lack of British economic data left the UK currency listless.
Sterling also faced some pressure from growing concerns about the UK’s cost-of-living crisis, with energy bills set to rise 4% in October and again in January.
Near-Term GBP/AUD Forecast: Risk Appetite in Focus
Looking ahead, Friday’s session contains little in the way of both UK and Australian economic data, likely leaving the pairing to trade on wider market trends.
Risk appetite could be a key factor, with any shifts potentially driving volatility in GBP/AUD. Federal Reserve interest rate expectations could be an important consideration, with Fed Chair Kevin Warsh due to deliver a keynote speech at the bank’s Jackson Hole symposium, and the US set to publish its annual revision to the non-farm payrolls figures.
Weak payrolls data and a guarded tone from Warsh could cheer markets, thereby lifting the Australian Dollar. Conversely, positive jobs figures and a hawkish tilt from the Fed chief could undermine AUD.
The ‘Aussie’ could remain supported by hawkish RBA bets, which may support gains or limit losses, depending on whether the market mood is risk on or off.
Our currency coverage draws on live market data, official economic releases and published bank research.
