Pound Australian Dollar (GBP/AUD) Exchange Rate Posts Limited Movement on Lack of Significant Data
The Pound Australian Dollar (GBP/AUD) exchange rate has settled slightly this morning after yesterday’s hawkish decision from the Reserve Bank of Australia (RBA) boosted the Australian Dollar (AUD).
At the time of writing, the Pound (GBP) is trading at AU$1.8782, virtually unchanged from this morning’s opening levels.
Australian Dollar (AUD) Retains RBA Gains, Looks for Further Impetus
The Australian Dollar has retained the gains it made yesterday off the back of the RBA’s hawkish decision to stick with its September tapering plans, despite a worsening Covid situation in New South Wales.
The ‘Aussie’ is trading high against most of its peers this morning, benefitting from a risk-on mood. Markets are cautiously optimistic despite the spread of coronavirus in China and the ongoing techlash: despite reassurances to major banks, Beijing’s persecution of large tech firms continues to cause concern.
AUD is at the mercy of Chinese trading sentiment to some extent, as China is the largest trade partner of Australia. A slowdown of economic conditions in China may present significant headwinds for the Australian Dollar as Covid cases increase and lockdown prospects have prompted the People’s Bank of China to hint at further easing of monetary conditions.
Markit PMIs and retail sales in Australia printed as expected in the Australian Session, with limited impact upon the GBP/AUD exchange rate.
Pound (GBP) Gains Limited as Staff shortages constrain Business Capacity
Despite this morning’s UK services PMI printing higher-than-expected, GBP gains have been capped by bearish investor sentiment.
Tim Moore, Economics Director at IHS Markit, has said:
‘July data illustrates that recovery speed across the UK economy has slowed in comparison to the second quarter of 2021. More businesses are experiencing growth constraints from supply shortages of labour and materials, while on the demand side we’ve already seen the peak phase of pent-up consumer spending.’
Positive UK impetus has recently included a fall in Covid cases and rise in vaccination uptake, alongside Brexit optimism, with the European Union (EU) removing the threat of imminent legal action against the UK over breaches of the Northern Ireland (NI) protocol.
With mixed feeling regarding the UK’s economic recovery, investors will wait upon tomorrow’s Bank of England (BoE) interest rate decision to inform further action. The UK central bank is likely to maintain its monetary policy settings: although rising concerns on inflation could prompt policymakers to hint at tapering sooner than expected.
Pound Australian Dollar Exchange Rate Forecast: Hawkish BoE to Boost the Pound?
Central Bank decisions have been informing trading sentiment in both currencies lately – this trend is looking to continue tomorrow with the BoE’s interest rate decision set to decide whether GBP investors strike a bullish or a bearish tone.
On Friday, a speech by RBA Governor Philip Lowe could provide further direction for the Australian Dollar, as Lowe is expected to expand upon the bank’s hawkish decision to go ahead with tapering plans despite a surge in Covid cases in Australia.
Next week, business and consumer confidence figure will be the main driver for AUD sentiment, while the UK will look to Thursday’s balance of trade release alongside GDP preliminaries.