GBPAUD has weakened as markets increasingly anticipate another Reserve Bank of Australia move. Australia’s economy grew 0.4% in the second quarter and 2.1% year on year, while underlying inflation sits at 3.6%, reinforcing expectations that policy may need to tighten further. Markets are pricing roughly a two-thirds chance of a September rise, and a 25-basis-point increase is fully priced by November, giving the Australian dollar support against sterling.
UK Inflation and Monetary Policy Outlook
In the UK, consumer price inflation rose to 2.9% in July versus the Bank of England’s 2% target, and higher energy costs are seen as an additional risk. The BoE voted 6–3 to keep Bank Rate at 3.75%, with three members backing a quarter-point increase, leaving the policy path less settled. Attention is turning to the UK’s August inflation report due on 16 September, a day before the next BoE decision, while Australian labour market and inflation releases will shape expectations for September versus November.
