Pound Australian Dollar (GBP/AUD) Exchange Rate Ticks Higher Following Queen’s Speech

(Updated 16:35 10/05/22)

The Pound Australian Dollar (GBP/AUD) exchange rate edged higher today. The Pound (GBP) saw limited gains following the Queen’s Speech after the announcement highlighted support for the Bank of England (BoE). The Australian Dollar (AUD) meanwhile stayed muted as concerns over lockdowns in China continued to weigh on the ‘Aussie’.

At time of writing the GBP/AUD exchange rate is at around $1.7770, which is up roughly 0.2% from this morning’s opening figures.

Pound Australian Dollar (GBP/AUD) Exchange Rate Trends Sideways ahead of Queen’s Speech

The Pound US Dollar (GBP/AUD) exchange rate is trading within a narrow range today. A mild recovery in the Australian Dollar (AUD) could be limiting significant gains for the currency pair. Poor data releases for the UK are both likely pushing the Pound lower. This may in turn also be keeping the GBP/AUD pair suppressed.

At time of writing the GBP/AUD exchange rate is at around $1.7729, virtually unchanged from this morning’s figures.

Pound (GBP) Subdued amid Fall to Retail Sales

The Pound (GBP) is muted against many of its rivals. Investors may be limiting significant bets on Sterling ahead of the Queen’s Speech later today.

The speech, to be delivered by Prince Charles, is expected to set out the government’s policies for the coming year. Analysts are hoping that the measures announced will go some way to provide support to businesses and UK households amid record-high inflation.

A fall to retail sales in April is also likely weighing on Sterling today. Figures collected by the British Retail Consortium (BRC) showed total sales falling by 0.3% across the country. The impact of the country’s cost-of-living crisis is thought to be the primary driver as consumers limit unnecessary spending.

Helen Dickinson, chief executive of the BRC, said:

‘The rising cost of living has crushed consumer confidence and put the brakes on consumer spending. Further headwinds are incoming, such as rising global food prices, which rose 13% between March and April’

Finally, GBP may also be seeing reduced interest amid fresh Brexit-related headwinds today. Reports have indicated that UK Foreign Secretary Liz Truss is preparing to scrap parts of the Northern Ireland protocol.

Australian Dollar (AUD) Muted as China Lockdowns Weigh on Currency

The Australian Dollar (AUD) recovered some of its losses overnight but is trading cautiously today. A mild return of risk-on trading sentiment is helping to bolster the ‘Aussie’. This comes in the face of further Covid-19 lockdown measures in China.

The situation in China is expected to continue to keep AUD suppressed in the coming days. Residents of Shanghai have reported that they are now unable to leave their homes, receive food deliveries, or socialise.

The measures have also affected manufacturing with Tesla’s Shanghai plant operating well below capacity.

The strict measures have also seen commodity prices tumble recently. Iron ore has dropped by nearly -6% which is likely helping push the ‘Aussie’ lower.

A rise to business confidence and retail sales in April may be helping to limit major losses for AUD, however. The figures could prompt increased bets on the currency amid expectations of a potential interest rate hike from the Reserve Bank of Australia (RBA).

GBP/AUD Exchange Rate Forecast: Will Queen’s Speech Deliver Support for UK Households?

Looking to the week ahead for Sterling (GBP), the Queen’s Speech due later today could affect confidence in the currency. The document is expected to lay out PM Boris Johnson’s policies to support households during the country’s cost-of-living crisis.

Thursday’s GDP figures could see the Pound dip should they print as forecast. Whilst GDP for March is expected to remain largely unchanged, the growth rate for the first quarter of 2022 is predicted to fall.

For the Australian Dollar (AUD), a fall to consumer confidence figures for May could drag the ‘Aussie’ on Wednesday. On the other hand, a speech from RBA Deputy Governor Michele Bullock could limit major losses should she give any indications of future policy tightening.

Gareth Monk

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