(Updated 16:45 10/06/22)
The Pound Australian Dollar (GBP/AUD) exchange rate continued to fall lower today. Weakness in the Pound (GBP) continued to have a negative impact on the currency pair.
Additional data releases today indicated that 9 in 10 individuals surveyed by the Office of National Statistics (ONS) had seen their cost of living increase. 52% of those surveyed said they had reined in their spending on food and non-essential travel.
The concerns over the country’s cost-of-living crisis have continued to keep Sterling suppressed over the past weeks, with Prime Minister Boris Johnson providing little indications recently as to any additional support.
At time of writing, the GBP/AUD exchange rate is at around $1.7490, which is down around -0.6% from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Slides amid Pessimistic UK Outlook
The Pound Australian Dollar (GBP/AUD) exchange rate is tumbling lower today. Continued pessimism surrounding the UK economy’s forward outlook could be contributing to the currency pair’s woes. Stability in the markets is also driving a return of risk appetite. This may also be pushing the exchange rate lower. Major losses could be limited by a softer economic data from China however, as well as fresh lockdown fears.
At time of writing the GBP/AUD exchange rate is at around $1.7509, which is down around -0.5% from this morning’s opening figures.
Pound (GBP) Falls as Fears of UK-EU Trade War Intensify
The Pound (GBP) is dropping against its rivals today amid fresh Brexit-woes and dour predictions for the UK economy. A risk-on trading sentiment may help to prevent major losses for Sterling today.
Reports that the UK government is set to bring forward legislation concerning the Northern Ireland Protocol could be denting confidence in GBP today. Foreign Secretary Liz Truss is expected to present the bill to the House of Commons on Monday.
The proposed changes to the agreement have drawn criticism from representatives in Brussels and Washington. Some Conservative MPs are fearful that any moves from the UK government could prompt a UK-EU trade war.
The legislation could see further action from 148 rebel Conservative MPs who voted against PM Johnson this week. Johnson won a vote of no confidence on Monday, although those voting against the PM were higher than predicted. The ability of the 148 MPs to potentially cripple the UK government’s legislative efforts are potentially pushing the currency lower today.
Pessimistic predictions for the country’s economy from multiple sources may also be limiting gains for Sterling today. Inflation expectations amongst UK households have hit fresh highs in reports published by the Bank of England (BoE).
Australian Dollar (AUD) Climbs despite Fall to Iron Ore Prices
The Australian Dollar (AUD) is making strong gains against its rivals today amid a return of risk appetite. The return of some stability to the equities market is likely benefitting the ‘Aussie’.
Major gains could be limited by an easing of inflationary pressures in China, as well as a drop to iron ore prices amid fresh lockdown concerns.
Just 10 days after having eased lockdowns across the city, parts of Shanghai have seen fresh restrictions as well as mass testing. The news has caused a drop to iron ore prices which may be hampering significant upward movement for AUD today.
Cooling inflation in China may also be weighing upon the ‘Aussie’ today. Factory-gate inflation hit its slowest pace in 14 months in May due to weak demand amid tight Covid-19 restrictions.
GBP/AUD Exchange Rate Forecast: Will BoE Raise Rates as Expected?
Looking to the coming week for the Pound (GBP), an uptick to GDP figures on Monday could help to push the currency higher. Tuesday’s employment figures could also help boost Sterling should unemployment remain high.
Investors will be most keenly awaiting Thursday’s interest rate decision from the Bank of England (BoE), however. The central bank is expected to raise interest rates by 0.25% which could help to bolster Sterling.
For the Australian Dollar (AUD), a rise to business confidence on Tuesday could help restore positive sentiment in AUD. The ‘Aussie’ could also see a boost from a tight labour market should unemployment remain high as forecast on Thursday.