GBP AUD Jumps on December Interest Rate Bets

GBP AUD Mixed as Traders Weigh Up Recent Data

The GBP AUD exchange rate was 1% higher after the UK released it inflation figures. The latest numbers showed annual inflation had risen to 4.2%. That prompted buying in sterling as traders predict the Bank of England will have to raise interest rates in December. Stronger employment figures and a dovish RBA has added to this week’s move.

The GBP AUD exchange rate was trading at 1.8565 after the latest economic data.

Inflation surges in the UK but BoE remains confident

The latest UK inflation figures saw a near-decade high on soaring energy and fuel costs.

The Office for National Statistics (ONS) said that Consumer Prices Index (CPI) inflation rose sharply from 3.1% in September to 4.2% last month, which is the highest level since December 2011. The number was pushed higher after Ofgem increased the energy cap by 12% after a recent increase in prices.

Grant Fitzner, chief economist at the ONS, said: “Inflation rose steeply in October to its highest rate in nearly a decade. This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cars and fuel as well as higher prices in restaurants and hotels.”

“Costs of goods produced by factories and the price of raw materials have also risen substantially and are now at their highest rates for at least 10 years,” he added.

The Bank of England projected 5% inflation by Spring of 2022, but it is unknown whether Wednesday’s numbers will push them to act in December. Stronger employment data has also boosted the pound sterling this week.

Britons could be at risk of lockdown if unvaccinated

There are fears that the UK may follow Germany with a lockdown for the unvaccinated.

Professor John Ashton, formerly a director of public health for the North-West of England, said it “may come to that” in the country.

Speaking on daytime TV, he said: “I fear that it might come to that. We all need to be playing our part, and at the moment, it’s as though the thing is over. We really need to get back to wearing our masks, social distancing and yes, passports.”

 

“This is not about civil rights, it’s about winning the battle with this virus and not throwing in the towel, which is what seems to be being advocated by the business community.”

The comments will give traders some caution as other European nations implement these measures, and it could take some of the latest gains away from the pound.

In Australia, Victoria’s state premier Daniel Andrews is also facing civil rights criticism as protestors descended on the steps of Parliament this week. Australian’s have just escaped another long lockdown but other nations are moving closer to the strategy as their winter approaches.

The pound sterling versus the Australian dollar will likely move on the UK rate hike bets as the only data left this week is a consumer confidence release for the UK on Friday.

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