Pound Australian Dollar (GBP/AUD) Exchange Rate Undermined by UK Fuel Crisis
The Pound Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range this morning as concerns over the potential economic impact of the UK’s fuel crisis saps Sterling sentiment.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8810, virtually unchanged from this morning’s opening levels.
Pound (GBP) Dented by Fuel Crisis Concerns
The Pound (GBP) is struggling to attract support this morning as GBP investors grow increasingly unnerved by the current fuel pump shortages being seen around the UK.
Following a weekend of panic buying, the UK is now into its fourth day of long queues at the pumps as motorist fearing a shortage attempt to top up their vehicles.
Reports suggest that up to 90% of the UK’s petrol stations are now running short on fuel and GBP investors are concerned about the potential knock-on effect on the UK economy and some workers and businesses struggle to obtain fuel.
Tom Pugh, UK economist at RSM, warns about the impact on GDP if the crisis persists:
‘If the pumps stay dry for much longer, then the impact of people unable to go about their work and daily lives may join labour shortages, soaring energy prices and a lack of shipping containers as another drag on the economy.
‘What’s more, a shortage of fuel for trucks and delivery vans risks exacerbating the shortage of goods which has been hampering the economic recovery. This will inevitably be a drag on GDP growth in September compared to if there were no shortages.’
The government has put the army on standby to start delivering fuel, but some analysts warn that this will only be a sticking plaster, and that the UK needs to do more to more to solve its current HGV driver shortage.
Australian Dollar (AUD) Subdued amid Bearish Trade
At the same time, the Australian Dollar (AUD) is also muted this morning as a risk-off mood has prevailed through the first half of today’s European trading session.
This comes amidst a pick-up in the US Dollar (USD) coupled with ongoing concerns over the debt crisis at Chinese property giant Evergrande, which remains under threat of collapsing.
The souring market mood has seen the ‘Aussie’ forced to relinquish its gains from earlier in the Asian session, after the country’s latest retail sales figures printed above expectations.
Pound Australian Dollar Forecast: More UK Doom and Gloom to Send Sterling Lower?
Looking ahead, the Pound Australian Dollar exchange rate could face headwinds through the second half of this week’s session if UK headlines remain broadly negative.
Additional concerns over the trajectory of the UK’s economic recovery are likely to sap Sterling sentiment.
Meanwhile, so long as the Evergrande crisis continues to hang over markets, the upside potential of the Australian Dollar looks limited.