At the time of writing the GBP/AUD was trading at around AU$1.9145, virtually unchanged from Monday’s opening rate.
The Australian Dollar (AUD) struggled to garner investor attention on Monday following a slew of underwhelming data releases from the world’s second largest economy, China.
China’s second quarter GDP growth rate confirmed a sharper slowdown than anticipated, and fell from 5.3% down to 4.7%, significantly behind a more modest 5.1% estimate.
The latest data confirmed the lowest level of growth since 2023’s first quarter and served to undermine the Australian Dollar thanks to its status as a Chinse proxy currency.
Lynn Song, Chief Economist for Greater China at ING, commented: ‘Overall, the disappointing GDP data shows that the road to hitting the 5% growth target remains challenging. A negative wealth effect from falling property and stock prices, as well as low wage growth amid various industries’ cost cutting is dragging consumption and causing a pivot from big ticket purchases toward the basic ‘eat, drink and play’ theme consumption.’
Further undermining the ‘Aussie’ was the publication China’s latest retail sales data. The index also reported a drop in June, and fell from 3.7% down to 2% rather than a more modest 3.3% expectation.
This alongside China’s GDP reading ultimately kept the ‘Aussie’ from rising during Monday’s European session.
Pound (GBP) Holds Steady despite Absence of Data
The Pound (GBP) managed to hold steady against the majority of its counterparts on Monday despite a data-light UK calendar.
After surging to multi-week highs against its peers last week, GBP exchange rates were supported through to Monday’s trading session.
Sterling sentiment was buoyed by a better-than-expected UK GDP print, recent hawkish comments from Bank of England (BoE) officials and hope of political stability in the UK following Labour’s landslide victory.
GBP/AUD Exchange Rate Forecast: UK CPI to Drive Movement?
Looking ahead, the primary catalyst of movement for the Pound Australian Dollar exchange rate this week will likely be the release of the UK’s latest consumer price index.
The data is expected to report that core inflation cooled in June, expected to fall from 3.5% to 3.4%, while headline inflation is forecast to remain unchanged at 2% target, the BoE’s inflationary target.
Should the data confirm a further fall in UK CPI, this could ramp up BoE intrest rate cut bets and in turn dampen Sterling sentiment.
Turning to the Australian Dollar, on Wednesday, Reserve Bank of Australia (RBA) policymaker John Simon will deliver a speech. Should he advocate for an additional rate hike during his address, the ‘Aussie’ could strengthen.
Moving into Thursday, Australia’s latest unemployment rate is forecast to remain unchanged at 4% in June, and could see AUD exchange rates edge higher should the data match expectations.
