The Pound Australian Dollar (GBP AUD) exchange rate skyrocketed this morning, rising over two cents from its worst levels as Australia’s Inflation figures fell short of expectations.
Pound Australian Dollar (GBP AUD) Rises after Lacklustre Australian Inflation
The Pound surged against the Australian Dollar today as the latest Australian Consumer Price Index disappointed investors.
The report showed that inflation rose from 1.3% to 1.5% in the fourth quarter, falling short of expectations that it would rise to 1.6% and notably down from a reading of 1.7% at the same point last year.
The lacklustre figures weighed heavily on the ‘Aussie’ as traders began to speculate that should inflation continue to lag behind expectations in 2017 then the Reserve Bank of Australia may seek to drop interest rates to a new record low. As Capital Economics chief Australian economist Paul Dales explained;
‘The rebound in headline inflation in the fourth quarter of last year has been baked in the cake for some time, so the real news is that underlying inflation did not budge up. If this remains a theme for 2017, as we expect, then the RBA may yet cut interest rates from 1.5 per cent now to 1 per cent.’
Sterling Rises as MPs Plan Amendments to Brexit Bill
Following an initial fall immediately after the Supreme Court ruling, the Pound has bounced back today as opposition and rebel Tory MPs begin planning their opposition to the Brexit bill.
While most MPs do not seek to completely block Brexit, many are planning to amend the Article 50 bill in order to gain greater clarity on how Prime Minister Theresa May plans to negotiate the UK’s exit from the EU, with calls for the government to release a white paper on its strategy.
Pound Australian Dollar Forecast: UK GDP Report Ahead
The Pound’s gains could be cut tomorrow morning following the release of the UK’s Q4 GDP data, which is forecast to report that Britain’s economy slowed towards the end of 2017, causing it to miss its 2.2% growth target.
Meanwhile the Australian Dollar may stumble again at the end of the week as analysts expect the domestic Producer Price Index to have fallen at the end of 2016.
Current Interbank Exchange Rates
At the time of writing the GBP AUD exchange rate was trending around 1.66 and the AUD GBP exchange rate was trending around 0.59.
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