Sterling has gained almost 1% against the Aussie Dollar so far during today’s trading session, as hopes of a high inflation figure tomorrow have boosted hopes of an interest rate hike from the Bank of England later in the year.
At 9.30am tomorrow morning I believe that there could be some volatility between Sterling and other major currency pairs, as the inflation readings for January will be released.
Inflation figures out of the UK are being closely watched by foreign exchange markets as over the past year there have been some sharp falls in Sterling’s value which can push up the inflation rate. Also the UK is close to embarking on it’s formal separation from the EU after voting for a ‘Brexit’, so all eyes are monitoring the UK’s economic performance due to the uncertainty surrounding the UK economy moving forward.
The annual inflation figure tomorrow is expected to show a reading of 1.9% which is up from the previous figure of 1.6%. If the actual reading comes out substantially above 1.9% I expect to see a boost in Sterling’s value as the likelihood of an interest rate hike from the Bank of England (BoE) will increase.
The Pound’s value is mostly driven by sentiment at the moment but inflation figures are likely to impact it’s value due to interest rate change expectations, especially as the BoE hasn’t hiked the UK base rate in around 10 years now.
There are other events which could also impact the Pound to Aussie Dollar exchange rate moving forward, and if you wish to be kept up to date regarding these do feel free to get in touch for further information.
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