Pound Australian Dollar Exchange Rate Subdued as Energy Headwinds Persist
(Updated 16:18, 07/10/2021) The Pound Australian Dollar exchange rate continued trading low throughout this afternoon’s session as a lack of significant data for either currency limited GBP/AUD movement.
Several external factors exerted additional downside pressure upon the Pound – namely, complaints from petrol retailers regarding the speed of the fuel crisis recovery, and renewed inflation concerns.
The Petrol Retailers Association says that fuel stations still aren’t being restocked fast enough two weeks after the crisis began, adding that the ‘current inept prioritisation policy’ is not working, and the government’s decision to suspend competition law has been a ‘failed experiment’.
Meanwhile, the Bank of England’s chief economist Huw Pill has warned that the UK is facing a longer and larger spike in inflation than expected, due to hiring difficulties and rising gas prices. Pill observes:
‘As the pandemic recedes and the level and composition of global demand and supply normalise, inflationary pressures should subside… But the magnitude and duration of the transient inflation spike is proving greater than expected.’
Original article continues below:
GBP/AUD Exchange Rate Dips on Soaring UK Gas Prices
The Pound Australian Dollar (GBP/AUD) exchange rate has fallen this morning as downbeat projections from energy experts weigh upon Sterling sentiment. Industry leaders warn that serious ramifications are on the cards unless the government reduces energy costs.
At the time of writing, GBP/AUD is trading at A$1.8629, down slightly from today’s opening levels.
Pound (GBP) Tumbles as Several Energy Suppliers Go Under
The Pound (GBP) is trading down against the majority of its peers this morning as GBP sentiment remains subdued over the ongoing UK energy crisis.
The crisis has already forced a wave of collapses among energy suppliers, three of the most recent being Igloo Energy Supply Ltd., Enstroga Ltd. and Symbio Energy Ltd.
Wholesale gas prices hit new all-time highs yesterday, prompting warnings that UK factories may have to shut down over winter or switch to more polluting fuels in order to remain open.
Steel, glass and chemical manufacturers are especially hard hit, warning of shocks to both industry and consumers as the situation worsens: other industries also face knock-on effects, including water companies and ceramics producers.
Disruptions to these industries could place a further drag upon the economy, adding to concern in sectors such as construction, where shortages of materials and staff have already driven growth expectations to an eight-month low.
There is some hope, however, in the form of an offer of assistance from Russia. President Vladimir Putin suggested that state-backed Gazprom could increase gas supplies to help Europe avert further price pressures.
Subsequently, the price of gas for next-day delivery in the UK dropped this morning by 5.8%.
Australian Dollar (AUD) Firms Overall on PM Optimism
Australia’s Prime Minister Scott Morrison gave an optimistic message to the nation yesterday, commending the country’s Covid vaccination drive as 30 million inoculations will have been administered by the end of the week.
Morrison remarked ‘we’re on the home stretch’, cheering the public and investors alike, and adding that he believes Australia can achieve ‘much higher vaccination rates than the 70-80% set out in the national plan.’
From Monday, the state of New South Wales (NSW) will begin the process of reopening, hailed by many as a welcome reward after months of harsh restrictions. Not everyone is optimistic, however.
NSW Premier Dominic Perrottet announced some significant departures from the roadmap on Thursday, accelerating plans to reopen the state. His amendments mean that Australians can have double the amount of home visitors, and all children will return to school on 25 October, rather than returning in stages.
The ‘scope and breadth’ of changes to the NSW roadmap out of lockdown caught the Australian Medical Association by surprise, and may lead to ‘skyrocketing cases’ according to its NSW president, Danielle McMullen.
Mixed responses to the news may cap Australian Dollar (AUD) tailwinds today, although the currency is also supported by a stronger risk sentiment in the current session.
Pound Australian Dollar Exchange Rate Forecast: AUD to Gain on RBA Review?
The GBP/AUD exchange rate is likely to be driven by external factors through the remainder of today’s session, as a lack of significant data leaves both currencies vulnerable to market dynamics.
Into tomorrow, a financial stability review from the Reserve Bank of Australia (RBA) may influence Australian Dollar trading, potentially boosting the ‘Aussie’ if Tuesday’s hawkish tone is maintained.