GBP/AUD Exchange Rate Slumps Amid Strengthening RBA Bets

The Pound (GBP) to Australian Dollar (AUD) exchange rate has been under pressure in recent days, dropping by roughly 0.5% from last week's start as the 'Aussie' continues to be bolstered by speculation of a further interest rate hike from the Reserve Bank of Australia (RBA).

The latest data from Australia's Bureau of Statistics shows that the country's economy expanded by 0.4% in the second quarter, beating forecasts and pushing annual growth up to 2.1%. This has reinforced expectations of another 25-basis-point rate hike at the RBA's September meeting, with odds now at around 70%, up from 50% before the data was released.

The Pound, on the other hand, faced significant headwinds last week due to the global bond market sell-off, which saw UK gilts come under particular pressure. The yield on 10-year government bonds briefly reached its highest level since 2008, while 30-year gilt yields approached 5.9%, their highest since 1998.

This week's session may see the Pound to Australian Dollar exchange rate come under further pressure as the UK's latest GDP figures are published. If these figures show a slowdown in month-on-month growth, it could weigh on Sterling and complicate the Bank of England's policy outlook. Meanwhile, Australia's consumer and business confidence figures may also influence the 'Aussie' this week.