Pound Australian Dollar Exchange Rate is Strengthening Despite Downbeat Market
The Pound Australian Dollar (GBP/USD) exchange rate is trending upwards after unexpectedly poor trade data out of Australia dampened AUD sentiment.
At time of writing the GBP/AUD exchange rate is around $1.3130, moderately unchanged from this morning.
Australian Dollar (AUD) Slips as Short-Lived Confidence runs out
The Australian Dollar (AUD) saw a drop against the Pound this morning with the release of surprisingly lacklustre data.
Australia’s Balance of Trade printed a sharp decline to $7.46 billion in March, falling way short of the forecasted $12 billion.
Investors were in high spirits heading into the session as ongoing surges in commodity prices and relative strength of the Australian economy would continue to boost the ‘Aussie’. But the mood soured as trade data fell below expectations with exports plummeted on the back of sluggish foreign demand due to escalating geopolitical risks and ongoing supply chain issues.
Pound (GBP) Enjoys Upswing Despite Cost-of-Living Squeeze
The Pound (GBP) is recovering against the Australian Dollar today despite the escalating situation in Ukraine weighing further on the economy.
As the war in Ukraine shows no signs of ending, and with reports of further war crimes emerging, the UK has followed in the footsteps of the US and European Union in stepping up sanctions against Russia. Tougher action will be taken on major banks, as well as an increase in providing humanitarian and military aid to Ukraine. Secretary of State Liz Truss said of stepping up the sanctions:
“Our latest wave of measures will bring an end to the UK’s imports of Russian energy and sanction yet more individuals and businesses, decimating Putin’s war machine. Together with our allies, we are showing the Russian elite that they cannot wash their hands of the atrocities committed on Putin’s orders. We will not rest until Ukraine prevails.”
The UK administration has confirmed that an outright ban on all new outward investment in Russia, as well as freezing assets on Sberbank and Credit Bank of Moscow, which holds more than one-third of Russia’s total banking assets.
GBP investors fear the ramping up of sanctions could further stoke global inflationary pressures and exacerbate the UK’s cost-of-living crisis, which Deutsche Bank has warned could push the UK into a recession.
Pound Australian Dollar Forecast: BoE Pill Speech to Influence Sterling?
Looking ahead, without any UK data due out this week, the focus will be on BoE Chief Economist Huw Pill’s speech later today. Any further indicator to the direction that the BoE will take regarding monetary policy will influence movement with the Pound.
Fresh off the back of further sanctions imposed by the UK, the ongoing situation in Ukraine will continue to play a big part in market movements, with the protracted war likely to weigh heavily on inflationary pressures, and in turn the Pound Australian Dollar exchange rate.