Pound Australian Dollar (GBP/AUD) Exchange Rate Strengthens in Bearish Trade
The Pound Australian Dollar (GBP/AUD) exchange rate is ticking higher this morning, as a gloomy market mood saps demand for the risk-sensitive ‘Aussie’.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8905, just shy of a one-week high.
Australian Dollar (AUD) Dented by Souring Market Mood
The Australian Dollar (AUD) is on the defensive against the Pound (GBP) and the majority of its other peers this morning as the appeal of the risk-sensitive ‘Aussie’ is undermined by souring market sentiment.
This comes as investors appear to be growing increasingly skittish regarding the spread of the Delta variant of the coronavirus throughout many parts of the world.
The more infectious strain has spread rapidly in recent months, causing a headache for a significant number of countries, even those who had appeared to have been largely covid free for months, such as China.
This in turn has raised renewed concerns over the trajectory of the global economic recovery, with some analysts warning that the recovery may be less impressive than initially hoped.
In addition to this, Australian Dollar investors appear reluctant to make any aggressive bets ahead of the publication of the latest US consumer price index on Wednesday, with the release potentially acting as a major market mover as another surge in inflation could stoke Federal Reserve tapering speculation.
Pound (GBP) Buoyed by Rising Economic Optimism
At the same time, the Pound (GBP) is trading with modest gains this morning as the currency is buoyed by the improving economic outlook in the UK.
With Scotland having now joined England in lifting most remaining coronavirus restrictions and new cases in the UK not rising anywhere near as fast as many had initially feared, GBP investors are optimistic about the country’s economic prospects in 2021.
Sterling also continues to enjoy tailwinds from the Bank of England’s (BoE) latest policy meeting, following which it hinted that some ‘modest monetary tightening’ may be necessary in the future, if the UK’s economic recovery broadly continues its current trajectory.
Pound Australian Dollar Forecast: Bumper UK GDP to Boost GBP/AUD?
Looking ahead, the main catalyst of movement in the Pound Australian Dollar exchange rate through the second half of this week will no doubt be the publication of the UK’s latest quarterly GDP release.
Thursday’s figures are likely to bolster the GBP/AUD exchange rates, amidst forecasts the UK economy will have enjoyed a bumper 4.8% rebound in economic growth in the second quarter as lockdown restrictions were lifted.
In the meantime, the Australian Dollar could face some headwinds with the publication of Australia’s latest consumer confidence index.
This comes as Australia’s current coronavirus resurgence is likely to have dampened household sentiment this month.