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AUD/GBP Exchange Rate Fluctuates on BoE Rate Hike Speculation

Pound Sterling Exchange Rates

Hawkish Remarks from BoE Policymaker Prompts Movement in AUD/GBP

The Australian Dollar Pound (AUD/GBP) exchange rate saw significant movement during the European Session on Monday on the back of rising interest rates speculation.

At the time of writing AUD/GBP is currently trading close to its opening levels, having slumped 0.3% earlier on Monday.

Pound (GBP) Volatile Following Ramsden Comments

The Pound opening this week’s session on strong footing yesterday as markets reacted to comments from Bank of England, (BoE) Deputy Governor Dave Ramsden over the weekend.

In an interview with the Sunday Times Ramsden said;

‘Relative to where I was, I see the case for rates rising somewhat sooner rather than somewhat later.’

Ramsden is seen one of the more dovish within the BoE, being one of two who voted against a rate hike in November.

So his comments appearing to support a rate hike in the near future are seen as a strong indicator that the BoE make strike a more hawkish tone in coming rate decisions.

However despite this Sterling was forced to relinquish some of these gains late in the session as a bout of profit taking and an uptick in the US Dollar prompted a sharp reversal for GBP.

Australian Dollar (AUD) Muted as Markets Await US Data

Meanwhile the Australian Dollar started the week a little more subdued as markets urged caution ahead of some key data from the US.

With market risk appetite generally being driven by the strength of the US Dollar, movement in the ‘Aussie’ in the first half of this week is likely to be dictated by the performance of recent US Data.

Of particular note will be Jerome Powell’s testimony in front of Congress on Wednesday, with the new Chair of the Federal Reserve expected to discuss the bank’s monetary policy.

Markets will therefore be closely watching for any hints that the Fed may accelerate his monetary tightening, which may prompt USD to punch higher, consequently weakening AUD.

AUD/GBP Forecast: Slide in Manufacturing Activity to Weaken ‘Aussie’?

Looking ahead the AUD/GBP exchange rate may retreat again in the second half of the week as Australia publishes its latest Manufacturing PMI.

Economists forecast that the PMI will have slipped from a five-month high of 58.7 to 57 in February, likely dragging on the Australian Dollar.

Meanwhile the UK will also publish its latest manufacturing figures this week, with a similar slowdown in domestic factory activity likely to limit the Pound’s advances.