Pound Australian Dollar (GBP/AUD) Directionless after Johnson’s Resignation Speech
(Updated 16:40 07/07/22)
The Pound Australian Dollar (GBP/AUD) exchange rate continued to trend sideways today. The exchange pair likely saw major losses limited after UK PM Boris Johnson confirmed his resignation. Johnson stated that he would remain as a caretaker PM until a new leader was chosen. The news likely helped to dampen some market uncertainty today.
Additionally, GBP/AUD may have been further bolstered by rising case numbers across China and Australia.
Major gains for the currency pair were likely limited by upbeat Australian trade figures earlier today, however. The country’s trade surplus was pushed to a fresh record high by sales of coal and iron ore.
At time of writing the GBP/AUD exchange rate is at around $1.7572, essentially unchanged from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Rangebound as Johnson set to Resign
The Pound Australian Dollar (GBP/AUD) exchange rate is trading within a narrow range today. News that UK Prime Minister Boris Johnson is set to resign today could be bolstering the pair. On the other hand, the exchange rate may be struggling after an above-forecast trade surplus.
At time of writing the GBP/AUD exchange rate is at around $1.7565, virtually unchanged from this morning’s opening figures.
Pound (GBP) Bolstered as Johnson Expected to Give Resignation Statement
The Pound (GBP) is seeing some immediate gains today after the news that Boris Johnson is set to resign. Markets had been concerned amid potential uncertainty as resignations from ministers continued to mount.
This morning saw additional resignations from UK cabinet members including the newly appointed education minister Michelle Donnelan.
Speaking on the Pound’s climb, XTB’s chief market analysts Walid Koudmani said:
‘The resignation of Boris Johnson as UK PM will breath a sigh of relief for UK investors as it curtails the uncertainty of a government in name only. We saw some instant buying in GBP which gained against the Euro as investors reacted to the news of his impending resignation.’
Australian Dollar (AUD) Climbs after Record-High Trade Surplus
The Australian Dollar (AUD) is making steady gains against its rivals today. The ‘Aussie’ could be seeing a boost off the back of a record-high trade surplus. The figures for May are thought to have been driven by sales of coal and iron to China. An uptick to these commodity prices may also be push AUD higher.
The ‘Aussie’ could see its gains limited today by Covid-19 fears at home and abroad, however. The Australian government has announced it will be expanding its rollout of a fourth vaccine dose amid a fresh wave of the Omicron variant. The states of New South Wales and Victoria have both stated they are seeing a rising infection levels.
Covid-19 outbreaks across China may also be weighing on AUD today. Shanghai is seeing new mass testing efforts amid fresh fears of strict lockdowns. Additionally, the city of Macau has closed a popular shopping center in a bid to contain its outbreak.
GBP/AUD Exchange Rate Forecast: Will Mann Reinforce BoE’s Stance?
Looking ahead to the rest of the week for Sterling, a speech from Bank of England (BoE) policymaker Catherine Mann could provide some impetus to the currency. Recent days have seen other members of the central bank speak out in favor of rate hikes. If Mann echoes this stance, then it could provide some support to the Pound. The effects of Johnson’s resignation are also likely to prompt movement in Sterling.
The Australian Dollar meanwhile is set to see no further significant data this week. Any further changes to the price of iron could prompt movement in the ‘Aussie’. The damage caused by widespread flooding across the country could see AUD trend lower in the coming days. Any further rise to Covid-19 case numbers could also dent confidence in AUD.