The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate weakened on Wednesday following the release of positive inflation data out of the land down under. The Australian Dollar to Euro (AUD/EUR) exchange rate strengthened by more than 0.70%.
The Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Slipped To a Session Low Of 1.9197
The Australian currency strengthened against the majority of its major peers as inflation data for the first quarter of 2015 came in stronger-than-expected to ease pressure on the Reserve Bank of Australia (RBA) to make another interest rate cut at May’s policy meeting.
According to the Australian Bureau of Statistics, consumer price inflation slowed to 1.3% on a year-on-year basis from the 1.7% in the preceding quarter. That number had been forecast by economists so it had little effect on the ‘Aussie’.
Despite that, the trimmed mean of consumer price inflation, which is a more important inflation measurement to the RBA increased to 2.3%. Economists had been expecting the figure to remain at the 2.2% level seen previously. This unexpected increase boosted the Australian Dollar against its major currency peers.
‘This inflation number has given some fresh doubts on whether we get a May cut coming through which is supporting the Aussie. The balance of probability for a May cut has shifted, given what we’ve seen,’ said Chris Weston, chief market strategist at IG Australia.
Australian Dollar to New Zealand Dollar (AUD/NZD) Exchange Rate Parity Delayed
The Australian Dollar’s rise means that the likelihood that the currency will fall to parity with its New Zealand relation has been delayed.
‘Parity is a significant psychological level for the market and probably one which will attract participants trying to breach it as well as those trying to defend it. The inflation figures spoiled the party for now but I think we’ll get more stabs at it in the future,’ said Imre Speizer from Westpac Banking Corp.
Against the Pound Sterling the Australian Dollar is likely to hold onto gains as upcoming Bank of England policy meeting minutes are expected to show that policy makers remain uncertain as to when a UK interest rate rise will occur. Any signs that policy makers are growing hawkish and the Pound could rally, if the minutes suggest that the opposite is occurring then the Pound will weaken.
