(Updated 17:00 28/01/22)
The Pound Australian Dollar (GBP/AUD) has continued to climb today amid a sustained bout of risk-off trading.
At time of writing the GBP/AUD exchange rate is at around $1.9172, up around 0.8% from this morning’s opening figures.
Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs amid Risk-Off Trading
The Pound Australian Dollar (GBP/AUD) exchange rate has steadily climbed today amid a risk-off market mood, although gains for the Pound (GBP) have been limited by domestic headwinds.
At time of writing the GBP/AUD exchange rate is at around $1.9116, which is up around 0.5% from this morning’s opening figures.
Australian Dollar (AUD) Dips as Daily Covid-19 Deaths Hit Fresh High
The Australian Dollar (AUD) has dipped against its competitors today amid a risk-off trading mood, as well as a fresh record-high death toll in the country. Climbing commodity prices may have helped cap losses for the ‘Aussie’ however, as well as speculation of a rate hike ahead of the Reserve Bank of Australia’s next meeting.
Australia recorded its deadliest day since the start of the Covid-19 pandemic on Friday, as daily deaths reached 100. State leaders are cautiously optimistic however as hospital admissions have continued to fall, with more than 93% of adults having now had two vaccination doses.
The ongoing rise in iron ore prices may prevent drastic losses for AUD however, as the commodity continues to climb amid market speculation. A predicted boom in Chinese construction and potential supply chain constraints in Australia have been the main drivers behind the climb, providing a bullish tone for iron ore. Concerns are mounting that the Omicron variant could reach Western Australia which has previously kept Covid-19 at bay due to strict border controls.
Pound (GBP) Rises as UK Government awaits ‘Partygate’ Report
The Pound has risen against some of its riskier competitors today amid a risk-off mood in the markets, although the currency has continued to struggle against domestic headwinds as government ministers await the report into ‘Partygate’.
There has been speculation throughout the week as to when the report, written by senior civil servant Sue Gray, is to be finally released to the UK government. Reports this morning have indicated that the delay may be due to the recently announced investigation into the alleged illegal gatherings by the Metropolitan Police, with the references to ongoing criminal cases potentially removed.
Sterling could see further Brexit-related headwinds this week as negotiations between the UK & EU concerning the Northern Ireland Protocol rumble on. Northern Ireland’s Democratic Unionist party has set a fresh 21 February deadline for UK foreign secretary Liz Truss to reach a satisfactory solution on the issue. Both Truss and EU negotiator Maroš Šefčovič have stated that they hope a deal can be done before election campaigns for the May Stormont elections begin.
GBP/AUD Exchange Rate Forecast: Will BoE Commit to Further Interest Rate Hikes?
Looking to the week ahead for the Pound (GBP), investors will be keenly awaiting the Bank of England’s (BoE) interest rate decision on Thursday. Expectations that the central bank will announce a rate hike are high, and Sterling is likely to climb should this be the case.
The final reading of January’s PMIs for the UK are also due on Thursday, which should they dip as forecast could limit upward movement for GBP.
Similar to the UK, AUD investors will be watching the RBA’s movements throughout the week for signs of a potential chance in monetary policy. With a speech from Governor Lowe on Wednesday and the RBA meeting on Friday, the Australian Dollar could be boosted should investors pick up on any hawkish signals. Thursday’s balance of trade data could pull the ‘Aussie’ down however with a widening in December currently forecast.