(Updated 16:45 24/03/22)
The Pound Australian Dollar (GBP/AUD) exchange rate has dipped today. The Pound (GBP) continued to suffer from a pessimistic outlook for the UK economy. Distributive trades figures for March showed a higher than expected fall to the UK’s reatil sales. The Bank of England’s dovish outlook has also continued to weigh on Sterling.
At time of writing the GBP/AUD exchange rate is at around $1.7582, which is down roughly -0.2% from this morning’s opening figures.
Pound Australian Dollar (GBP/AUD) Exchange Rate Trends Sideways as Spring Budget Underwhelms
The Pound Australian Dollar (GBP/AUD) exchange rate is trading narrowly today. A widely-criticised spring budget and dovish Bank of England (BoE) outlook is weighing on the Pound (GBP) today. Meanwhile, the Australian Dollar (AUD) is suffering from a pullback in commodity prices.
At time of writing the GBP/AUD exchange rate is at around $1.7611, virtually unchanged from this morning’s figures.
Pound (GBP) Falls amid Sunak’s Lacklustre Support Measures
The Pound (GBP) is sliding against its peers today. A dovish assessment from the Bank of England (BoE) last week has continued to influence investors’ movements. Wednesday’s spring budget is also likely weighing on Sterling as Chancellor Rishi Sunak faces criticism from all corners.
Figures released by the Resolution Foundation showed that around 1.3 million people are set to fall into absolute poverty in 2023. The organisation criticised Sunak’s ‘big but poorly targeted policy package’ announced yesterday, saying that it would do little to support those hardest hit.
Significant losses for Sterling could be limited following PMI figures today. Whilst the UK’s manufacturing sector index fell by more than expected, the services sector PMI beat forecasts to print at 61.
Analysts pointed to an easing of Covid-19 measures as the primary driver for the services sector. On the other hand, a poor business outlook relating to the war in Ukraine is the likely cause for the drop to manufacturing.
Last week’s dovish tact from the BoE is also continuing to weigh on Sterling today. Despite a 0.25% rate hike from the central bank last week, markets had been hoping for a more aggressive stance. The BoE reigned in expectations of a hawkish forward outlook, stating that ‘further modest tightening on monetary policy’ would be considered in the coming months.
Australian Dollar (AUD) Falls despite Positive PMIs
The Australian Dollar (AUD) is dropping against many of its competitors today. A pullback in commodity prices is likely harming confidence in the ‘Aussie’. On the other hand, significant losses for AUD may be limited following positive PMI figures released on Wednesday.
Australia’s manufacturing index rose to above forecasts of 55 to 57.3. The country’s services sector meanwhile also rose above forecasts of 54.5 to 57.1. Analysts highlighted the reopening of the country’s borders in February has a primary driver of growth in the country’s dominant services sector.
Jingyi Pan, Economics Associate Director at S&P Global said:
‘The Australian economy continued to expand strongly in March reflecting robust business conditions post the COVID-19 Omicron wave. Price pressures worsened, however, unsurprisingly aggravated by the slew of issues including floodings in Australia, the Ukraine war and broader supply chain constraints.’
AUD may see further losses today amid risk aversion in the markets. Reports on Wednesday that Russian troops had taken residents of the city of Chernihiv hostage as well as further attacks on the outskirts of Kyiv could prompt a retreat to global risk appetite.
Additionally, fresh reports of Ukrainian strikes on Russian naval forces may also prompt fewer bets on riskier currencies.
GBP/AUD Exchange Rate Forecast: Will UK Retail Sector Struggle as Expected?
Looking ahead for the Pound, an expected dip to March’s distributive trades figures later today could dent confidence in Sterling. Additionally, a forecast drop to retail sales in February could pull Sterling lower on Friday.
The Australian Dollar will see no further significant data this week. The ‘Aussie’ is likely to continue to be affected by fluctuating commodity prices and any changes to global risk appetite.