(Updated 16:58 17/12/21)
The Pound Australian Dollar Exchange Rate has continued to trade within a limited range over the course of the day’s session.
At time of writing the GBP/AUD exchange rate is at around 1.8559, nearly unchanged since this morning.
Pound Australian Dollar (GBP/AUD) Exchange Rate Muted as COVID-19 Cases Soar
The Pound Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range today, as rising COVID-19 cases and fears over the Omicron variant place pressure on the currency pair.
At time of writing the GBP/AUD exchange rate is virtually unchanged at around $1.8569.
Pound (GBP) Dips Despite Above Forecast Retail Sales
The Pound has dipped against most of its competitors today, despite retail sales figures printing above forecast earlier today. Sterling continues to face headwinds in the face of the Omicron variant and poor growth indicators.
Whilst retail figures for November rose above forecasts to 1.4% versus 0.8%, British retailers have warned analysts that they are already starting to feel the impact of the Omicron variant as footfall decreases.
The news provided a slight boost to the Pound as the European session opened, but record-high Covid-19 cases and fall consuming confidence heaped pressure on the currency.
The inflationary pressures felt by consumers could give confidence to BoE policymakers today following their 8-1 vote in favour of raising interest rates on Thursday. The central bank shocked investors for the second time in as many months, especially as markets had largely priced out a rate rise following uncertainty generated by the Omicron variant.
The central bank also announced that it would be cutting its growth forecasts for December and the first quarter of 2022 as the UK’s economic recovery continues to falter.
Composite PMI figures released on Thursday indicated a slowdown of growth across all of the country’s private sectors, with travel and hospitality firms the worst affected. Analysts were quick to point out that future figures could be even worse as the impact of the Omicron variant becomes more evident.
Adam Hoyes, UK economist at Capital Economics, was surprised by the underperforming growth figures:
‘The fall in the composite PMI in December doesn’t come as much of a surprise given the recent rise in cases of the Omicron variant … But it was much bigger than expected, and shows that caution among businesses and consumers is starting to weigh on activity, particularly in the services sector.’
Australian Dollar (AUD) Stumbles amid Risk-Off Market Mood
The Australian Dollar has fallen against its rivals today as a risk-averse trading mood and rising Covid-19 cases weigh on the currency.
Covid-19 cases in New South Wales have risen to record levels in recent weeks, prompting fears of fresh restrictions across the country.
Losses in the Australian Dollar could be underpinned by the rising price of iron ore however, as the price of the commodity has continued to climb over the course of the week.
GBP/AUD Exchange Rate Forecast: Will UK Growth Slow Further?
With no further significant data for either currency today, a glance at next week shows final readings of GDP figures for the UK on Wednesday. Growth in the third quarter is currently forecast to slow quite drastically, from 5.5% down to 1.3%, which is likely to further undermine confidence in the Pound and the UK’s economic recovery.
Another reading of the consumer confidence index on Thursday for December is forecast to show another rise, although fears over the Omicron variant could well affect these figures.
It’s set to be a quiet week for the Australian Dollar next week, although the release of meetings from the latest Reserve Bank of Australia (RBA) meeting could prompt movement in the currency should investors pick up on any hints of forward guidance.