GBP/AUD Exchange Rate as UK Economy is ‘Prime for a Sharp Snap Back in Consumer Activity’
The Pound Australian Dollar (GBP/AUD) exchange rate rose today as UK retail is set to fuel the nation’s economic rebound, according to the EY Item Club. The pairing is currently fluctuating around AU$1.78.
The Pound benefited from the EY Item Club’s new forecast which now predicts that the UK’s economy will grow by 6.8% in 2021. The forecasting body said that the British economy had ‘proven to be more resilient than seemed possible’.
UK consumer confidence has also risen to its fastest rate in a decade in the first three months of this year.
Ian Stewart, chief economist at Deloitte, commented:
‘The UK is primed for a sharp snap back in consumer activity. High levels of saving, the successful vaccination rollout and the easing of the lockdown set the stage for a surge in spending over the coming months.’
As a result, the Pound Australian Dollar exchange rate has benefited from increased confidence in the UK economy.
In UK Covid-19 news, daily cases continue to remain relatively low, with the figure down by -899 compared to last week. Daily deaths are also in single figures at 6 – up by 2 compared to the previous week’s data.
Australian Dollar (AUD) Struggles Despite Strong Chinese Economic Data
The Australian Dollar struggled today despite surging Chinese industrial profits. China is Australia’s largest trading partner, so any improvement in the world’s second-largest economy is usually AUD-positive.
Beijing has continued to benefit from its early crackdown on the Covid-19 breakout last year. As a result, the Chinese economy is expected to continue to expand this year.
Last week saw the release of China’s latest GDP figure which rose by 18.3% in a post-Covid surge.
However, AUD investors are remaining cautious after Australia has paused all flights from India following the nation’s Covid-19 outbreak.
Premier Mark McGowan commented:
‘India, there needs to be a suspension. There is huge pressure now on all our quarantine facilities as a result of people coming from India.’
Australia’s domestic Covid-19 situation is however showing signs of improvement after lockdowns in Perth were eased earlier this week.
However, this has failed to buoy the AUD/GBP exchange rate.
GBP/AUD Exchange Rate Forecast: Could Rising Australian Inflation Boost the ‘Aussie’?
Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of the latest RBA Trimmed Mean CPI data for the first quarter.
Any improvement in the outlook for Australia’s economy could help the AUD/GBP exchange rate begin to claw back some of its losses.
Risk sentiment will also continue to drive the ‘Aussie’ this week. Any further signs of rising global Covid-19 cases therefore would be AUD-negative.
The Pound Australian Dollar (GBP/AUD) exchange rate could continue to head higher as UK economic optimism increases.