Pound Surges as Aussie Falls After Australian Inflation Miss

The Pound to Australian Dollar (GBP/AUD) exchange rate has surged after weaker-than-expected Australian inflation data reduced expectations for another Reserve Bank of Australia interest rate hike.

The annual consumer price inflation slowed to 3.9% in the second quarter, below forecasts that it would remain at 4.1%. This weaker reading prompted investors to cut the implied probability of an August interest rate hike to the low single digits, with several major banks abandoning forecasts for near-term tightening.

The Australian Dollar (AUD) tumbled through Wednesday's Asian session as markets further reduced expectations for additional Reserve Bank of Australia policy tightening. Meanwhile, while the Pound (GBP) strengthened against the Australian Dollar, it traded in a relatively narrow range against most other major currencies as investors awaited Thursday's Bank of England interest rate decision.