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GBP AUD Exchange Rate Slides after UK Inflation Misses Target
Published: 14 Feb at 5 PM Tags: Pound Sterling, Dollar Exchange Rate, Australian Dollar Exchange Rate, Currency Exchange, UK, Exchange Rates, Inflation,
The Pound Australian Dollar exchange rate has been largely negative this week, with a day-long deterioration being seen after the morning’s January inflation rate stats.
These showed a rise in annual inflation from 1.6% to 1.8%, although investors soon turned away from Sterling as inflation had been forecast to hit 1.9%.
Economists were divided about how to act on the information; PricewaterhouseCoopers Senior Economic Advisor Andrew Sentance estimated that UK inflation would hit 3% by late 2017, while Fidelity International official Tom Stevenson forecast that;
‘The fall in the Pound is really starting to stoke inflation as the rising cost of imports bites. With Britain seemingly heading for a hard Brexit, it’s likely we will see the Pound continue to wobble over the next two years, resulting in higher inflation in the short term. Indeed, price rises are expected to reach 2.8% by the end of 2017.
With inflation forecast to exceed the Bank of England’s target this year, still slow wage growth and Mark Carney showing no intention of raising rates any time soon, millions of households will begin to feel the financial squeeze in their pockets. Rising prices and relatively stagnant incomes are a painful combination’.
This combination could be realised on Wednesday morning when UK average earnings figures are released. At present, forecasts are for flat growth with and without bonuses; an unexpected slide is expected to greatly weaken the Pound Australian Dollar exchange rate.
Historic Highs in Australian Confidence Boost AUD Demand
The Australian Dollar has been in a clearly superior state against the Pound recently, rising by 0.2% in the pairing.
The latest data has covered NAB business confidence in January, which has risen from 6 points to 10. While an apparently small rise, the also-released NAB business conditions figure has posted its best stats since the late 2000’s financial crisis.
Further confidence stats are due in the near-term from Westpac bank, while the end of the week will bring employment figures for January.
The unemployment rate is due to stay at 5.8%, while the number of employed persons could boost AUD demand if it rises as forecast.
These showed a rise in annual inflation from 1.6% to 1.8%, although investors soon turned away from Sterling as inflation had been forecast to hit 1.9%.
Economists were divided about how to act on the information; PricewaterhouseCoopers Senior Economic Advisor Andrew Sentance estimated that UK inflation would hit 3% by late 2017, while Fidelity International official Tom Stevenson forecast that;
‘The fall in the Pound is really starting to stoke inflation as the rising cost of imports bites. With Britain seemingly heading for a hard Brexit, it’s likely we will see the Pound continue to wobble over the next two years, resulting in higher inflation in the short term. Indeed, price rises are expected to reach 2.8% by the end of 2017.
With inflation forecast to exceed the Bank of England’s target this year, still slow wage growth and Mark Carney showing no intention of raising rates any time soon, millions of households will begin to feel the financial squeeze in their pockets. Rising prices and relatively stagnant incomes are a painful combination’.
This combination could be realised on Wednesday morning when UK average earnings figures are released. At present, forecasts are for flat growth with and without bonuses; an unexpected slide is expected to greatly weaken the Pound Australian Dollar exchange rate.
Historic Highs in Australian Confidence Boost AUD Demand
The Australian Dollar has been in a clearly superior state against the Pound recently, rising by 0.2% in the pairing.
The latest data has covered NAB business confidence in January, which has risen from 6 points to 10. While an apparently small rise, the also-released NAB business conditions figure has posted its best stats since the late 2000’s financial crisis.
Further confidence stats are due in the near-term from Westpac bank, while the end of the week will bring employment figures for January.
The unemployment rate is due to stay at 5.8%, while the number of employed persons could boost AUD demand if it rises as forecast.
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Source: moneytransfer.co.uk