The Pound to Australian Dollar (GBP/AUD) exchange rate remained within a tight range on Tuesday following the Reserve Bank of Australia (RBA)’s latest monetary policy decision.
At the time of writing, the Pound was trading at approximately AU$1.9830 against the Australian Dollar, showing little movement from its opening level on Tuesday.
The Australian Dollar (AUD) managed to maintain its position against most of its counterparts following the RBA’s latest interest rate adjustment.
As widely anticipated, the central bank implemented a 25-basis-point rate cut, marking the first reduction in the official cash rate (OCR) since 2020.
Despite the rate cut, the Australian Dollar found support from hawkish remarks by RBA Governor Michele Bullock, who signaled resistance to a prolonged rate-cutting cycle, helping to bolster the ‘Aussie’ on Tuesday.
Meanwhile, the Pound (GBP) found some support as it strengthened against several major currencies, driven by the latest UK employment data.
The UK’s December unemployment figures surpassed expectations, holding steady at 4.4% instead of rising to the forecasted 4.5%.
Additionally, UK wage growth data showed an uptick, increasing from 5.6% to 5.9% over the same period.
This stronger labor market data dampened speculation of an imminent Bank of England (BoE) rate cut, offering further support to GBP exchange rates.
Looking ahead, the key driver of movement in the Pound to Australian Dollar exchange rate on Wednesday is expected to be the release of the UK’s latest consumer price index (CPI).
Projections suggest both core and headline inflation will rise in January, which could provide additional support for the Pound should the data reinforce expectations that the BoE will delay rate cuts.
As for the Australian Dollar, Wednesday’s economic calendar is light on domestic data, meaning the ‘Aussie’ may trade without a clear directional bias.
