Pound Australian Dollar Exchange Rate Sinks as UK Staff Shortages Weigh on Sterling
Pound Australian Dollar Exchange Rate Sinks as UK Staff Shortages Weigh on Sterling
(Updated: 31/08/2021 16:45) The Pound Australian Dollar exchange rate continued to fall later this afternoon as the UK furlough scheme enters its final month and fears of a staff shortage limit confidence in the nation’s economic recovery. The pairing is currently fluctuating around AU$1.88.
Despite UK business confidence being at a four-year high, Pound investors are more concerned about rising Covid-19 infections and hospitalisations, as has been predicted for the autumn months.
As a result, the GBP/AUD exchange rate has remained subdued, with the risk-averse ‘Aussie’ improving from steadily growing confidence in the global economy.
However, any indications of rising Covid-19 infections in the UK would further drag down the Pound Australian Dollar exchange rate.
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GBP/AUD Exchange Rate Falls as Improving Risk Sentiment Boosts ‘Aussie’
The Pound Australian Dollar (GBP/AUD) exchange rate fell by -0.3% this morning despite the Chinese economy – the second largest in the world – showing signs of slowing down. The pairing is currently trading around AU$1.88.
The Australian Dollar (AUD) rose against the Pound today despite Australia’s largest trading partner, China, showing signs of slowing down as factory growth and services contract.
NBS statistician Zhao Qinghe comments:
‘This epidemic in multiple provinces and locations was a fairly big shock to the services industry, which is still in recovery.’
In Australian economic news, today saw the release of the latest building permits for July, which fell below forecasts by -8.6%.
As a result, the outlook for the Australian economy remains largely uncertain, with the nation’s strict zero-Covid-19 policy leaving markets pessimistic about the nation’s recovery in the months ahead.
However, a pullback in the safe-haven US Dollar has driven-up demand for the risk-averse ‘Aussie’, as global market risk appetite steadily improves.
Looking ahead, this evening will see the release of the Australian manufacturing PMI for August. Could an improvement in the nation’s manufacturing sector drive-up the AUD/GBP exchange rate?
Pound (GBP) Exchange Rate Sinks as UK Staff Shortages Dampen UK Economic Mood
The Pound (GBP) struggled this morning despite UK business confidence being at a four-year high, according to Lloyds bank. However, fears of severe staff shortages have driven-down confidence in the nation’s economy.
Hann-Ju Ho, senior economist at Lloyds’ business banking arm, explains:
Gareth Oakley, managing director for business banking at Lloyds, said:
‘It is clear there is still some level of uncertainty on inflation and the impact of price pressures. The last few months of the year will be pivotal to the future of UK economic growth.’
‘[Business confidence shows a] positive story about the country’s economic recovery … Staff shortages remain a challenge but as the economy moves back towards pre-pandemic levels we can be optimistic that the momentum for business confidence and economic optimism can be sustained in the months ahead.’
In the absence of any notable data releases today, the Pound is likely to remain subdued as coronavirus concerns take centre stage.
With autumn around the corner, GBP investors have become increasingly concerned about the possibility of rising case numbers and hospitalisations.
As a result, the outlook for the UK economy remains uncertain, with investors bracing for further hits to the nation’s economic recovery.
GBP/AUD Exchange Rate Outlook: Australian GDP Data in Focus
Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of Australia’s gross domestic product for the second quarter.
Could an improvement in Australian growth drive-up the Pound to Australian Dollar exchange rate?
Pound (GBP) traders will be eyeing tomorrow’s release of the UK’s manufacturing PMI for August. If this shows signs of improvement in the UK factory sector, then the GBP/AUD exchange rate would head higher.
However, could rising Covid-19 infection rates throughout the UK continue to hold down the Pound to Australian Dollar exchange rate?