A Week Ahead Forecast for Pounds to Australian Dollars: Under Strain as Wage Data Is Anticipated

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Pound to Australian Dollar (GBP/AUD) exchange rates started the new week with a vital takeaway and could fall further if the Reserve Bank of Australia (RBA)’s hawkish stance is vindicated by Wednesday’s wage data.

Carol Kong, an economist and currency strategist at the Commonwealth Bank of Australia., said, “Our wage tracker based on customer transactions and the Australian wage price index for Q4 2022 may support AUD on Wednesday.”

The Pound to Australian Dollar exchange rate (GBP/AUD) entered the new week on a weak footing as traders reacted to news that the Reserve Bank of Australia (RBA) may tighten its interest rate stance.

The pairing briefly dipped below the 1.74 handle on Monday, leaving the AUD in control of markets for the foreseeable future. If this week’s wage data reports show signs of acceleration, GBP/AUD could sink even lower and drop below 1.73.

“According to our internal wages tracker, wage growth is 1.0%/quarter (3.4%/year). Given Governor Lowe’s testimony last week, minutes for the 7 February meeting are expected to be hawkish, which may help support AUD/USD intraday.”, says Carol Kong.

The Pound to Australian Dollar (GBP/AUD) exchange rate began the week on a weak note and could fall even further if Australia’s Wednesday wage data confirms the Reserve Bank of Australia’s (RBA) hawkish stance on interest rates.

Earlier this February, the RBA raised its cash rate to 3.35% in its ninth increase since May 2022. It warned that further increases in interest rates are expected over the months ahead to ensure inflation returns to target.

The news triggered market-implied expectations that further increases could be on the cards in the months ahead.

Nevertheless, with GBP/AUD having already sunk and at risk of slipping further if Wednesday’s figures prove positive for AUD, markets look set to remain cautious until clarity can be provided regarding RBA‘s objectives and policies in the future.

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