GBP/AUD Exchange Rate Rangebound as Future of UK PM is Questioned
The Pound to Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range today as the UK Prime Minister, Boris Johnson, faces fresh scrutiny over the ‘Partygate’ scandal.
At the time of writing, the GBP/AUD exchange rate is trading at approximately AU$1.7541, with minimal movement from today’s opening levels.
Pound (GBP) Subdued as ‘Partygate’ Scandal Takes Focus
The Pound (GBP) is edging slightly lower against the Australian Dollar (AUD) this morning as the ‘Partygate’ scandal dominates UK headlines.
Despite continuously denying attending events during the 2020 lockdown, Johnson was fined last week for breaking the laws set by his own government throughout the pandemic.
Yesterday, the opposition tabled a motion to hold an inquiry whether Johnson misled parliament. Should the Privilege Committee find Johnson guilty of misleading parliament, he will be forced to resign under the ministerial code.
Today, Conservative MPs are seeking to delay the vote. Ministers have stated the vote should wait until after the police have finished their investigation so MPs ‘have all the facts at their disposal’.
However, Labour’s shadow health secretary Wes Streeting said:
‘Conservative MPs must decide today: are they standing with their voters, who are furious, or are they standing [by the] discredited, deceitful prime minister?’
As Johnson’s premiership is in question, UK political uncertainty is weighing on the Pound’s potential today.
Furthermore, Russia’s invasion of Ukraine continues to drive volatility in GBP exchange rates.
According to Ukraine’s Deputy Prime Minister Iryna Vereschuk, the humanitarian corridors from Mariupol didn’t go to plan due to Russia’s ‘lack of control’ over its troops.
As the Ukraine crisis continues without a clear end in sight, it’s placing undue pressure on the risk-sensitive Sterling.
Australian Dollar (AUD) Mixed as Shanghai’s Lockdown Eases
The Chinese-proxy Australian Dollar (AUD) is trending marginally higher against the Pound (GBP) this morning as factories in Shanghai plan to reopen.
Factories in the area have been closed for over three weeks due to high levels of coronavirus. Whilst Beijing maintains its ‘zero-Covid’ policy, the lockdown has had negative ramifications on the economy.
In turn, due to the close trading partnerships between Australia and China, this has weighed on the ‘Aussie’.
However, earlier this week, Chinese authorities announced factories can reopen providing closed-loop systems are in place. This has somewhat boosted AUD exchange rates.
Furthermore, the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting – released on Tuesday – continues to buoy the ‘Aussie’.
Pound Australian Dollar Exchange Rate Forecast: Will BoE Governor Strike a Dovish Outlook?
Looking ahead, the Pound Australian Dollar exchange rate is likely to be influenced by a number of speeches from Bank of England (BoE) policymakers and Governor, Andrew Bailey.
Bailey will speak tomorrow. Should he strike a dovish tone, it may dampen interest rate hike bets and weigh on Sterling.
Similarly, if BoE policymaker, Catherine Mann, appears overly cautious today, it may further hinder GBP exchange rates.
Moreover, the Ukraine crisis may continue to impact Sterling. Should the conflict escalate further, it may prevent Russian and Ukrainian officials from having meaningful negotiations.
On the other hand, the ‘Aussie’ may be pressurised by April’s flash PMI figures. Both manufacturing and services PMI is forecast to slip marginally.