Pound Australian Dollar (GBP/AUD) Exchange Rate Dips in Upbeat Trade

Pound Australian Dollar Exchange Rate Edges Lower on Risk-On Flows

The Pound Australian Dollar (GBP/AUD) exchange rate is trending lower at the start of today’s session as a risk-on mood disproportionately benefits the ‘Aussie’.

At the time of writing the GBP/AUD exchange rate is trading at around AU$1.7656, down roughly 0.5% from today’s opening rate.

Australian Dollar (AUD) Firms as Risk Appetite Improves

The Australian Dollar (AUD) is trending higher this morning as a risk-on impulse reflects positively on the antipodean currency.

Also buoying AUD exchange rates was the publication of China’s consumer price index. April’s CPI release exceeded forecasts, revealing Chinese inflation climbed from 1.5% to 2.1%.

The upbeat inflation figures reflected positively on the China-proxy ‘Aussie’ during the Asian session.

However, the Australian Dollar’s gains could prove short lived. A robust US inflation release could revive demand for the US Dollar (USD) later this afternoon. A stronger US Dollar is likely to sap market risk appetite.

In the meantime, the upside in the ‘Aussie’ is capped by the release of Australia’s latest consumer confidence figures.

The Westpac-Melbourne Institute Index of Consumer Sentiment fell over five points to a seven-year low in May. The particularly sharp deterioration in household morale this month alarmed AUD investors amidst fears the increasingly gloomy outlook could suppress consumer spending in the coming months.

Pound (GBP) Muted as Brexit Concerns Return

At the same time, renewed Brexit concerns are undermining demand for the Pound (GBP) this morning.

This comes after the UK rejected a proposal from the EU to reduce the impact of the Northern Ireland Protocol.

The EU suggests the proposals will help to cut down on checks and paperwork for goods entering Northern Ireland from elsewhere in the UK.

However the UK government, which still aims to scrap the protocol, claims the proposals will ‘worsen current trading arrangements’.

Chris Turner, Global Head of Markets and Regional Head of Research for UK, at ING, comments:

‘UK-EU trade relations seem to be deteriorating again, with Downing Street threatening to unilaterally suspend parts of the Northern Ireland protocol. Doing so could spark an unwelcome trade war.’

The renewed threat of a trade war between the UK and EU is unsurprisingly unnerving some GBP investors this morning.

Pound Australian Dollar Forecast: Slowdown in UK GDP to Apply Further Pressure to GBP/AUD?

The Pound Australian Dollar (GBP/AUD) exchange rate might face fresh pressure on Thursday when the UK publishes its latest GDP release.

The preliminary figures for the first quarter are expected to report growth slowed from 1.3% to 1%.

However, the accompanying month-on-month release may be even more concerning for GBP investors. Analysts forecast the UK economy will have stalled in March.

In the absence of any notable AUD data, the direction of the Australian Dollar is likely to driven primarily by risk dynamics.

Matthew Andrews

Contact Matthew Andrews


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