Pound Australian Dollar (GBP/AUD) Exchange Rate Slips as EU Initiates Legal Action
(Updated
The Pound Australian Dollar (GBP/AUD) exchange rate continued to drop today. The currency pair did manage to recover some losses however as risk appetite saw a mild retreat.
Fresh legal action by the European Union against the UK over the Northern Ireland Protocol likely kept pressure on the currency pair today. The EU has launched four legal cases against the UK government in response to the UK’s attempts to override the agreement. On Wednesday, the bill designed to alter the arrangement passed its final stage through the House of Commons.
Additionally, a reversal to iron ore’s movements in the commodities market may have also helped GBP/AUD to prevent any further falls.
At time of writing the GBP/AUD exchange rate is at around $1.7296, which is down roughly -0.2% from this morning’s opening figures.
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Pound Australian Dollar (GBP/AUD) Exchange Rate Drops amid Risk-On Mood
The Pound Australian Dollar (GBP/AUD) exchange rate is slipping today amid a risk-on mood in the markets. The currency pair may also be seeing losses due to a further drop in UK retail sales, adding to the country’s already poor outlook.
At time of writing the GBP/AUD exchange rate is at around $1.7284, which is down around -0.3% from this morning’s opening figures.
Pound (GBP) Slides as Jubilee Retail Sales Fall
The Pound (GBP) is dropping against its rivals today. A retreat to global risk appetite may be weighing on Sterling today. Additionally, a fall to June’s retail sales may also be pushing the currency lower.
June’s retail sales fell by -0.1% despite strong food & drink sales due to the Queen’s platinum jubilee. The country’s cost-of-living crisis was also thought to have limited big ticket purchases as household spending power continued to drop.
Lynda Petherick, head of retail for Accenture in the UK and Ireland, said:
‘The continuing slide in consumer spending is another blow to a retail sector already grappling with increasing costs and decreasing customer spending.’
Sterling could see some support from better-than-expected PMI figures today. The PMI for the services sector printed at 53.3 versus the 53 expected.
Gains for the Pound may be limited however, as manufacturing output fell for the first time since May 2020. Economist are predicting an imminent slowdown in the country’s economy.
Australian Dollar (AUD) Trends Lower after Disappointing PMI Figures
The Australian Dollar (AUD) is slipping today after softer than expected PMI figures this morning. A risk-off market mood may be helping to underpin the currency against its safer competitors, however.
Growth across all of Australia’s private sectors slowed this month according to today’s flash PMI figures. Services struggled the most amid continued Covid-19 fears, falling to 50.4 versus the 52.3 forecast.
Speaking on the figures. S&P Global Market Intelligent analysts said:
‘Panellists suggested that interest rate increases, alongside persistent inflationary pressures, have been a pivotal factor contributing to the weakened private sector improvement this month.’
Fears of a slowdown in China may also be weighing on the currency today. Thursday saw the Asian Development Bank (ADP) slash its growth forecast for the world’s second-largest economy. The ADP revised GDP growth for China down to 4% from 5%. The country’s strict ‘zero-Covid’ approach was highlighted as a key factor.
Rising iron ore prices may also help to support AUD today, however. Iron ore prices are climbing from a seven-month low , with falling steel inventories in China likely prompting increased demand.
GBP/AUD Exchange Rate Forecast: Will UK Retail Sector Suffer Further?
Looking to the coming week for the Pound, distributive trades figures on Tuesday could further dent confidence in the UK’s retail sector and pull the currency lower. The figures have fallen for three consecutive months prior.
The Conservative leadership contest may also weigh on Sterling in the coming week. Rishi Sunak and Liz Truss are set to take part in several televised debates.
For the Australian Dollar, a predicted rise to inflation in 2022’s second quarter could push the ‘Aussie’ higher on Wednesday if figures print as forecast. The data could also lead to fresh bets on further interest rate hikes by the RBA. A forecast downturn to PPI figures on Friday could trim these gains, however.
Also for AUD, a drop to retail sales on Thursday could see the currency slip.