GBP/AUD is slightly bearish in early trading on Wednesday. Currently, the pair is trading at 1.9257, down 0.03% as of 6:45 AM UTC. However, the price is increasing right now, moving away from the recent daily low at 1.9214.
The pound started to rebound after the Nationwide Building Society said earlier today that the annual growth of British house prices accelerated to 1.9% this month, from 1.4% in December, thus beating estimates. This is the fastest annual growth rate since November 2018, adding to confidence ahead of the Bank of England’s (BoE) meeting to decide the interest rate tomorrow.
Nationwide’s chief economist Robert Gardner commented:
“Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.”
In January alone, house prices rose 0.5% in monthly terms, up from 0.1% in December. Analysts polled by Reuters expected an increase of 0.3%.
Howard Archer, an economist at EY ITEM Club, stated:
“There is compelling evidence that the housing market has got an initial leg-up from increased optimism and reduced uncertainties following the decisive general election result as well as greater near-term clarity on Brexit.”
Archer added that he was upgrading his prediction for house price gains this year to 2.8% from 2.0%.
Earlier today, Australia released its inflation data, which increased in the last quarter of 2019. The consumer price index (CPI) rose by 0.7% in the three months to December, while analysts expected a 0.6% increase. Prices were driven by gains in domestic holidays, cigarettes, travel, fuel and fruits.
The annual pace of the inflation rose to 1.8%, though it’s still below the target of the Reserve Bank of Australia (RBA), which is set at 2-3%. A key figure of core inflation, referred to as Trimmed Mean CPI, slowed last quarter to 1.6%, keeping below target for the fourth year in a row.
In fact, precisely this ongoing weakness in the core CPI measure was one reason why the central bank decided to cut the interest rate on three occasions last year, to a record low at 1.75%.
The Aussie continues to be under pressure amid fears of returning bushfires and the outbreak of a coronavirus in China, which killed 132 people at the end of Tuesday.
