Pound Australian Dollar (GBP/AUD) Exchange Rate Reverses Recovery to Hit an Eight-Day Low

Pound Australian Dollar (GBP/AUD) Exchange Rate Sheds Gains as Market Mood Improves

(Updated 16:10, 15/6/22) The Pound Australian Dollar (GBP/AUD) exchange rate reversed this morning’s gains today as an improving market mood boosted the riskier Australian Dollar (AUD).

The upbeat mood was evident in European stock markets, with the FTSE 100 and STOXX 600 rising by 1.6% and 1.8%, respectively.

The Pound (GBP) did manage to strengthen against some of its other peers thanks to its status as a risk-sensitive currency. However, the ‘Aussie’ is seen as a riskier investment still. As a result, GBP/AUD fell.

At the time of writing, the Pound ‘Aussie’ pair has just bounced off an eight-day low of AU$1.7375. This is 0.4% down from today’s high of AU$1.7444.

Original article continues below:

Pound Australian Dollar (GBP/AUD) Exchange Rate Firms amid GBP Bargain-Hunting

The Pound Australian Dollar (GBP/AUD) exchange rate rose this morning, recovering most of its overnight losses, as Sterling seemed to attract some dip-buying.

Meanwhile, mixed data has limited the Australian Dollar (AUD).

Australian Dollar (AUD) Wavers amid Mixed Data

The Australian Dollar strengthened in overnight trade as a modest recovery in the market mood supported the risk-sensitive ‘Aussie’.

The more upbeat tone was evident in equity markets. China’s Shanghai Composite and Hong Kong’s Hang Seng were up by 0.55% and 1.14%, respectively.

Asian investors cheered China’s latest industrial production figures, which showed 0.7% growth year on year last month, rather than the 0.7% contraction that was forecast. Not only did this improve risk appetite, but it also boosted AUD due to the Australian currency’s status as a proxy for the Chinese economy.

Earlier on in the overnight session, however, Australia’s latest consumer confidence report showed a much sharper-than-forecast fall in morale. This seems to have capped AUD’s upside and left room for the Pound (GBP) to recover.

Pound (GBP) Attracts Dip-Buying

Sterling, meanwhile, is licking its wounds after yesterday’s sell-off. Following a surprise rise in the UK unemployment rate, and fears that Brexit will damage EU-UK trade and tear the union apart, GBP exchange rates took a nasty tumble.

Today the Pound is managing to regain some ground. Part of the upside may simply be investors seeking a bargain, after GBP/EUR and GBP/USD hit one- and two-year lows, respectively.

Some positive UK sales news may also be assisting Sterling’s recovery. British publishing giant Bloomsbury has reported a record year for sales, while WH Smith’s third-quarter revenues exceeded pre-pandemic levels for the first time since Covid struck.

These trading updates, although not hugely impactful on the Pound, are shreds of positive news amid a rather negative outlook for the UK economy. Therefore, GBP investors may have eagerly received them.

GBP/AUD Exchange Rate Forecast: Brexit Headlines to Undermine the Pound?

With no UK or Australian data due out today, GBP/AUD will likely trade on domestic UK news and risk appetite.

Any more negative Brexit headlines could hurt the Pound. The Northern Ireland protocol dispute and the possibility of a second Scottish independence referendum could potentially cause headwinds.

If global risk sentiment starts to sour, the Pound could climb higher against the riskier ‘Aussie’.

Markets are also braced for the Federal Reserve decision later this evening. If the Fed enacts a jumbo 75-bps rate rise, this could rattle global markets and dent risk appetite. In this case, AUD would likely fall. Whatever the Fed does, it could ripple out across the currency markets.

Samuel Birnie

Contact Samuel Birnie


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