The Pound-Australian Dollar rate could relinquish some gains if Australian trade data improves, although softer inflation may continue to weigh on the Aussie.
The Pound to Australian Dollar (GBP/AUD) exchange rate soared to a two-month high on Wednesday, following the publication of Australia’s latest consumer price index.
At the time of writing, GBP/AUD was trading at AU$1.9014. Up around 0.4% from the start of Wednesday’s European session.
Pound to Dollar (GBP/USD): 1.328847 (+0.44%)
Australian Dollar to Dollar (AUD/USD): 0.69587 (-0.43%)
DAILY RECAP:
The Australian Dollar (AUD) faced renewed selling pressure on Wednesday after Australia’s latest consumer price index came in slightly below expectations.
According to data published by the Australian Bureau of Statistics, headline inflation rose from 3.5% to 4% in August, undershooting expectations it would climb to 4.1%.
The softer-than-expected headline figure was particularly significant coming just a day after the Reserve Bank of Australia (RBA) struck a decidedly dovish tone as it delivered its latest interest rate hike.
While RBA Governor Michele Bullock stressed that policymakers remain prepared to tighten policy further, if necessary, she also signalled that she hoped the bank’s four hikes this year will be sufficient enough to control inflation.
The Pound (GBP) enjoyed broad support on Wednesday morning as the UK’s finalised GDP print for the second quarter surprised to the upside.
The Office for National Statistics (ONS) revised quarterly growth up to 0.5%, from its previous estimate of 0.4%.
GBP investors welcomed the revision as signs of UK economic resilience are likely to encourage the Bank of England (BoE) to follow its peers in tightening policy when it next meets in November.
Near-Term GBP/AUD Forecast: Improving Trade Data to Revive the ‘Aussie’?
Turning to the second half of the week, the Pound to Australian Dollar exchange rate may be forced to relinquish some of its recent gains with the publication of Australia’s latest trade data.
Economists forecast that a rebound in export growth will have helped wider Australia’s trade surplus in August, highlighting the continued resilience of a key sector of Australia’s economy.
Of course, if the trade data also falls short of expectations, we may see the ‘Aussie’ plum fresh lows.
Meanwhile, in the absence of any high-impact UK economic releases, movement in Sterling may prove limited through the second half of the week.
Our currency coverage draws on live market data, official economic releases and published bank research.
