Exchange Rate Forecast - GBP AUD Gains as Pound Boosted by UK CPI

December 13, 2016 - Written by Frank Davies

STORY LINK Exchange Rate Forecast - GBP AUD Gains as Pound Boosted by UK CPI

GBP AUD Exchange Rate Firmed by Unexpected Rise in UK Inflation

The Pound has been in demand against the Australian Dollar today, thanks to the earlier UK inflation rate figures for November rising above forecasts.

While an advance from 0.9% to 1% on the year had been predicted anyway, the annual rise to 1.2% turned the Pound bullish and triggered a major rally for Sterling over the course of the day.

Elsewhere in UK news, European Parliament Brexit negotiator Guy Verhofstadt has stated that the UK should have a clear time limit on being able to ‘transition’ out of the EU, which has thwarted hopes of dragging out Brexit and clear single market access for as long as possible.

Pound Australian Dollar Exchange Rate Forecast: GBP Losses Likely if UK Wage Growth Slows in October

While Sterling has been undeniably strong against the Australian Dollar today, data forecasts suggest that future movement will be downwards.

The next big news will come on Wednesday morning, when the UK’s average earnings for October are announced. At the risk of inciting fears of inflationary pressures, earnings growth is expected to slow, while long-term forecasts have been for further inflation increases in 2017.

Out at the same time as the earnings stats will be the UK’s claimant count change for November, which is expected to fall, as well as the October unemployment rate, which has a potentially damaging rise predicted by some sources.

Australian Dollar Pound Losses Triggered after Excess Iron Ore Figures Prompt Future Price Fears

The Australian Dollar has fallen against the Pound today, which comes despite the NAB business confidence result for November rising from 4 points to 5.

Causing greater discomfort among AUD investors has been iron-ore related news – recent export figures from Port Hedland have been close to a record high.

This has raised fears of iron ore oversupplies, which lowers the overall price of the nationally important commodity.

Australian Dollar Pound Exchange Rate Outlook: AUD Losses Expected if Fed Raises US Interest Rate

From Australia, the next exchange rate-shifting data will consist of tonight’s Westpac consumer confidence index, which is expected to decline marginally on the year from 101.3 to 101 points.

One major external factor that could also influence the AUD GBP exchange rate in the near-term will be the Fed interest rate decision, which is expected over Wednesday evening.

Ever since Donald Trump’s election victory, the odds of a December Fed rate hike have risen considerably, and were over 95% at the time of writing. If the Fed does choose to raise the rate, the Australian Dollar is likely to tumble, as such a move could strengthen the US Dollar which would make trading harder for Australian exporters.

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