The Pound to Australian Dollar (GBP/AUD) exchange rate briefly climbed to a one-week high on Thursday before easing back as investors locked in profits following Sterling’s recent rally.
At the time of writing, GBP/AUD was trading at AU$1.9294, having retreated from an earlier high of AU$1.9353.
Pound to Australian Dollar (GBP/AUD): 1.926352 (-0.27%)
Pound to Dollar (GBP/USD): 1.347811 (-0.45%)
Australian Dollar to Dollar (AUD/USD): 0.69967 (-0.19%)
DAILY RECAP:
The Australian Dollar (AUD) softened during Thursday’s Asian trading session as markets reacted to new data.
Australian consumer inflation expectations unexpectedly eased from 5.5% in June to 4.7% in July, the lowest reading since January.
The latest figures slightly dampened Reserve Bank of Australia (RBA) interest rate hike expectations, although the impact was limited.
This allowed AUD to recoup some losses as European trade began.
Meanwhile, the Pound (GBP) trended slightly lower on Thursday, with GBP surrendering some of Wednesday’s impressive gains.
Sterling had rallied in the middle of the week following reports that Shabana Mahmood is now the frontrunner for Chancellor in incoming Prime Minister Andy Burnham’s cabinet, rather than Ed Miliband.
Miliband had been the favourite to enter Number 11, but there were concerns among investors that the soft-left MP would pursue less orthodox fiscal policy. Mahmood is seen as more market-friendly, with City figures welcoming reports that she could be Burnham’s choice.
However, the Pound couldn’t sustain its gains into Thursday, even with UK GDP printing as forecast to show a 0.1% recovery in May.
Following Wednesday’s gains, Sterling seemed to suffer some profit-taking.
Near-Term GBP/AUD Forecast: Wider Trends to Drive the Pairing
Looking ahead, economic data is thin on the ground for both the Pound and the Australian Dollar on Friday, likely leaving the pairing to trade on wider market trends.
Sterling may draw support as Andy Burnham is formally declared Labour leader, paving the way for him to enter Number 10 on Monday, if investors continue to feel more certain about the future of UK politics.
Meanwhile, market risk dynamics may drive the risk-sensitive ‘Aussie’. Events in the Middle East could be key, although the recent escalation in tensions has had a muted impact on the market mood so far.
