Pound Australian Dollar (GBP/AUD) Exchange Rate Continues to Climb as UK Seeks Fix to Driver Shortage

Pound Australian Dollar (GBP/AUD) Exchange Rate Strengthens as Johnson Agrees to Relax Visa Rules

(Updated 16:30, 24/9/21) The Pound Australian Dollar (GBP/AUD) exchange rate has gained further ground today as Boris Johnson gives the green light to relax visa rules for lorry drivers.

The news comes amid concerns that the UK’s shortage of lorry drivers is leading to fuel outages at petrol stations, causing some forecourts to close, and could cause significant economic disruption in the run-up to Christmas.

The shortage is caused in part by a tightening of immigration rules post Brexit, as well as by an exodus of migrant workers during the pandemic. Analysts hope that by relaxing visa restrictions, workers from overseas will be able to fill the UK’s current skills gap.

Original article continues below:

Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs on Hawkish BoE and Risk-Off Mood 

The Pound Australian Dollar (GBP/AUD) exchange rate has firmed so far this morning, as Sterling finds continued support following the Bank of England (BoE) policy decision yesterday. 

The ‘Aussie’, meanwhile, is muted today amid a risk-off mood, with investors unsettled after the Chinese property firm Evergrande missed an interest payment deadline. 

Pound (GBP) Firms on BoE Tailwinds 

The Pound (GBP) has gained against the Australian Dollar (AUD) this morning, with yesterday’s hawkish tone from the BoE following its latest policy decision continuing to provide a tailwind for the currency. 

Yesterday, the BoE signalled that a taper may be imminent, saying that the case for a modest tightening of monetary policy ‘appears to have strengthened’. 

The bank voted to keep interest rates and quantitative easing unchanged, however there were two dissenting voices when it came to the bank’s bond-buying programme. 

The BoE also warned that the ongoing surge in energy prices could push inflation above 4% this year, with price pressure expected to persist into mid-2022. 

Following the announcement, City traders brought forward their forecast for a rate hike to as early as March next year, which gave GBP a boost. 

This seems to be providing continued support for the Pound today, with GBP/AUD up from this morning’s opening levels. 

Australian Dollar (AUD) Muted amid Risk-Off Mood 

The Australian Dollar is somewhat subdued today, with the risk-sensitive ‘Aussie’ losing some of its appeal amid a bearish market mood. 

A modest pullback in equity markets this morning highlights the shift to a more downbeat market mood, with the European Stoxx 600 and the FTSE 100 down by 0.65% and 0.15%, respectively, at the time of writing. 

The turn in market sentiment comes as the indebted Chinese property giant Evergrande missed a crucial interest payment deadline of $83.5mn (£61mn), without comment from the company. 

Evergrande now enters a 30-day grace period. If it is unable to pay the outstanding interest in that time, it will default. 

Howe Chung Wan, head of Asia fixed income at Principal Global Investors in Singapore, said: 

‘These are periods of eerie silence as no one wants to take massive risks at this stage… 

‘There’s no precedent to this at the size of Evergrande… we have to see in the next 10 days or so, before China goes into holiday, how this is going to play out.’ 

The fear is that if the company defaults it will send ripples through the Chinese economy and beyond. 

This possibility is currently stifling global risk appetite, thereby draining demand for the perceived riskier Australian Dollar. 

GBP/AUD Exchange Rate Forecast: CBI Data to Boost GBP? 

Looking ahead, the Confederation of British Industry’s distributive trades data for this month is due later this morning. While the gauge is expected to drop from 60 to 35, this would still be one of the highest readings in four years and could therefore support Sterling. 

Conversely, the UK’s ongoing economic worries – including labour shortages and the energy crisis – could weigh on GBP if any new negative developments hit the headlines. 

Meanwhile, news that France will bill Australia £45bn for its cancelled submarine contract could put downward pressure on AUD, as the relationship between the two countries remains fraught.