Pound Australian Dollar (GBP/AUD) Exchange Rate Gains Despite Looming Recession
The Pound Australian Dollar (GBP/AUD) exchange rate rose this morning despite worries about the UK economy.
At time of writing the GBP/AUD exchange rate is trading around $1.7757, having recovered its overnight losses.
Pound (GBP) Trades Higher despite Burgeoning Economic Crisis
The Pound (GBP) recovered against the AustralianDollar (AUD) today, even amid the economic crisis that continues to grip the UK.
Despite the weight of looming recession fears and less aggressive action from the Bank of England (BoE), Sterling is up against most of its peers today, having recovered its overnight losses against the ‘Aussie’. But with the UK economy unexpectedly contracting in March and inflation hitting heights not seen in over 40 years, the Pound is expecting turbulent times ahead.
Further capping GBP’s recovery is the ongoing Brexit feud. With Britain looking to effectively override parts of the Northern Ireland protocol, irking the Europe Union in the process and further damaging the already-soured relationship, a trade war could well be on the cards. In the middle of a cost-of-living crisis, such an event would heap pressure on the UK economy and sap demand for Sterling.
Despite these fears however, the Pound is rising today, with no clear catalyst for the movement.
Australian Dollar (AUD) Slips Despite Positive Employment Data
The AustralianDollar has fallen against the Pound today, losing the gains it made overnight following strong employment data.
Australia’s unemployment rate printed at 3.9%, unchanged from the previous month’s downwardly revised figure, to hold at the lowest level since the 1970s. Full-time employment rose by 92,400 in the same period, much higher than the expected 15,000 rise.
Despite this positive release, the ‘Aussie’ is experiencing headwinds amid rising global growth concerns as China’s zero-Covid policy weighs heavily on the world economy.
In addition, uncertainty heading into the Australian Federal Elections may also be pressuring AUD. The elections are set to be close, with a high likelihood of a hung parliament. This political uncertainty could be hurting the ‘Aussie’ today.
Pound Australian Dollar Forecast: Domestic Data to Undermine the Pound?
The release of both the UK consumer confidence and retail sales reports could create even stronger headwinds for the Pound as neither is projected to print positively. Retail sales could be particularly impactful. Markets expect sales to have shrunk by 0.2% in April, which would represent the third consecutive month of contraction. Such a result would be further evidence that the UK’s cost-of-living crisis is weighing on consumer spending and hurting the country’s economy.