The Australian Dollar (AUD) to Pound (GBP) Exchange Rate declined
Due to the Reserve Bank of Australia’s (RBA) aggressive interest rate rise, the Pound Australian Dollar exchange rate fell on Tuesday. Investors had thought that despite the raise being widely anticipated, further tightening would result from the recent increase in Australian inflation statistics.
Hawkish Forward Guidance from RBA
Phillip Lowe, the governor of the RBA, said that “additional rises in interest rates would be needed over the months ahead to guarantee that inflation returns to goal,” which cheered AUD investors. As a result, the Australian Dollar gained strength and rose above most important rivals.
The pound struggles as doubts are raised about the Bank of England’s (BoE) tightening cycle.
While investors revised their expectations for the Bank of England’s (BoE) tightening cycle, the Pound struggled. Even while the BoE raised rates last week, it also issued a warning that the current cycle will soon come to an end. Catherine Mann, a BoE policymaker, issued a statement that revived hopes for more tightening.
Sterling is under pressure due to a lack of clarity.
Despite this, the BoE’s forward guidance lack of clarity put pressure on the pound, especially after remarks by officials sidestepped monetary policy. The British Retail Consortium’s figures also revealed a drop in January’s retail sales, underscoring the strain on UK consumers even further.
The Future of the Australian Dollar and the Pound
The Pound is anticipated to have limited liquidity in the near term, and any new information on the ongoing industrial action and bullying charges in the UK might have an adverse effect on Sterling. Similar circumstances apply to the Australian Dollar, since local news reports and any fresh information on the RBA’s forward guidance may affect the currency’s appeal to investors. Additionally, the AUD may suffer as a result of US-China tensions.