(Updated 16:30 13/12/21)
The Pound Australian Dollar (GBP/AUD) as continued to climb amid a risk-averse trading mood throughout the day’s session.
At time of writing the GBP/AUD exchange rate is at around $1.8582, which is up roughly 0.4% from this morning’s figures.
Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs amid Risk-Averse Market Mood
The Pound Australian Dollar exchange rate has risen since the opening of today’s session as a risk-off market mood saps the appeal of the ‘Aussie’.
At time of writing the GBP/AUD exchange rate is at around $1.8565, which is up roughly 0.3% from this morning’s figures.
Pound (GBP) Subdued as UK Accelerates Vaccine Booster Programme
The Pound has traded within a narrow range against its competitors today after having falling close to last week’s one year low’s against the US Dollar. This comes after a press conference by UK Prime Minister Boris Johnson on Sunday evening announcing an expanded rollout of the country’s vaccine booster programme.
Johnson warned that the country faced a ‘tidal wave’ of new infections in the wake of the Omicron variant which, when coupled with new COVID-19 restrictions in the UK, is likely to have caused market confidence in Sterling to fall.
Further uncertainty over the newly discovered Omicron variant and the country’s economic recovery is likely to give the Bank of England (BoE) further cause to hold off on an interest rate rise. Markets have already largely priced out a rate rise ahead of the BoE’s Thursday meeting, and analysts see little chance of the BoE changing tact.
Shafiq Shabir, head of electronic trading at Intertrader, had the following to say on the BoE’s approach:
‘There’s no doubt that inflation is causing a persistent headache for central bankers, but with increased uncertainty around Covid-19, it may well be the case that the Bank has missed its opportunity to act.
‘In reality, it is still early days with the emergence of Omicron, and we won’t know its economic impact for some time, while labour shortages continue to persist. It’s easy to see the MPC taking a “wait and see” approach until more evidence emerges. ’
Sterling may well see further Brexit related headwinds today as French fishers threatened to go ahead with a pre-Christmas blockade of British goods entering Calais, despite the French and UK governments largely abandoning talks of a trade-war.
Australian Dollar (AUD) Slips as Iron Ore Prices Fluctuate
The Australian Dollar (AUD) has dipped against many of its rivals as the currency continues to be affected by fluctuating currency prices and economic developments in China.
Demand for iron ore has remained high as market analysts expect a rebound following China’s ramping down of steel production over the winter.
The Chinese government has announced a number of monetary and policy measures in order to stabilise the country’s economy including the procurement of iron ore, although news today that some companies have suspended production due to COVID-19 virus outbreaks is likely to cause a drop in AUD.
In addition, the risk sensitive ‘Aussie’ also appears to be suffering due to a cautious market mood this morning.
GBP/AUD Forecast: Will BoE Surprise Investors?
Looking to the week ahead, the Pound is likely to see some significant movement as some high-profile UK data is released in the run-up to the BoE’s Thursday meeting.
A forecast fall in the unemployment rate in October and expected rise in domestic inflation rate last month could give investors even further cause to doubt the BoE’s stance should the figures print as expected.
For the Australian Dollar, Tuesday is forecast to show a rise in business and consumer confidence as the country continues to show a strong economic recovery. Industrial production figures from China could also boost the ‘Aussie’, as well as forecast fall in the unemployment rate on Thursday.