GBP/AUD Surges on Soft Aussie Inflation, Trade Data to Reveal 'Aussie' Rebound

The Pound to Australian Dollar exchange rate surged to a two-month high on Wednesday, following the publication of Australia's latest consumer price index. The data showed that headline inflation rose from 3.5% to 4% in August, which was slightly below expectations.

The Reserve Bank of Australia (RBA) had raised interest rates just a day earlier and expressed hopes that four hikes this year would be sufficient to control inflation. RBA Governor Michele Bullock stated that policymakers remain prepared to tighten policy further if necessary.

The Pound (GBP) benefited from broad support on Wednesday morning as the UK's finalised GDP print for the second quarter surprised to the upside, revised up to 0.5% from its previous estimate of 0.4%. This development is likely to encourage the Bank of England (BoE) to follow its peers in tightening policy when it next meets in November.

The Pound to Australian Dollar rate may relinquish some gains if Australian trade data improves, although softer inflation may continue to weigh on the Aussie. Economists forecast a rebound in export growth and a wider Australia's trade surplus in August, which could revive the 'Aussie'.