Pound Australian Dollar (GBP/AUD) Exchange Rate Falls as BoE Delays Interest Rate Decision
(Updated 16: 09/09/22)
The Pound Australian Dollar (GBP/AUD) exchange rate held around its earlier lows for the rest of the day. A return of global risk appetite likely kept the currency pair suppressed.
GBP/AUD may also have seen losses after the announcement by the Bank of England (BoE) that they would be delaying their interest rate decision until 22 September. The announcement came in the wake of Queen Elizabeth II’s death with the UK now in a period of mourning. The announcement may have prompted some uncertainty in Sterling.
At time of writing the GBP/AUD exchange rate is at around $1.6924, which is down around 0.6% from the morning’s opening figures.
Original article below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Drops amid Risk-On Mood
The Pound Australian Dollar (GBP/AUD) exchange rate is falling amid a strong risk-on impulse in the markets. Softer than expected Chinese inflation data may also be pushing the currency pair lower.
At time of writing the GBP/AUD exchange rate is at around $1.6925, which is down roughly 0.6% from this morning’s opening figures.
Australian Dollar (AUD) Buoyed by Soft Chinese Inflation Data
The Australian Dollar (AUD) is making strong gains against its peers today. A risk-on impulse is likely helping the AUD to climb today.
The currency may also be benefitting from softer-than-expected Chinese inflation figures. August’s inflation rose below forecast by 2.5% versus forecasts of 2.9%. PPI also rose well below expectations, climbing to 2.3% versus a predicted rise of 3.1%.
As a primary export partner of China, the ‘Aussie’ is likely benefitting from the increased spending power lower inflation may bring.
The Australian Dollar may see gains capped however as extended Covid-19 lockdowns in China weigh on demand in the country. The city of Chengdu extended its lockdown of 21 million residents after further Covid-19 cases were found.
A rise in iron ore prices may also be supporting the currency today.
Pound (GBP) Slips despite Announcement of Energy Support Plans
The Pound (GBP) is slipping against its riskier peers today off the back of a return of risk appetite. Sterling may be finding support today against its safer rivals from from optimism surrounding the UK’s energy support plan, however.
Speaking on Thursday, Prime Minister Liz Truss announced that the government would be freezing energy costs at around £2500 a year for households for two years. Businesses are also expected to receive a six-month support package.
Whilst the move helped shore up support for the currency in the markets, the support received a mixed reception elsewhere. Business owners criticised the lack of detail and limited length of the package.
Bets on an interest rate hike from the Bank of England (BoE) at their meeting next week may also be bolstering GBP.
GBP/AUD Exchange Rate Forecast: Will BoE Hike Rates as Forecast?
Looking ahead to next week for the Pound, a predicted slip in GDP figures on Monday could dent confidence in Sterling. The downturn is expected to ease slightly from June however which could limit the negative impact of the data.
Tuesday’s employment figures could help to bolster Sterling however from increased BoE rate hike bets. July’s unemployment is expected to remain close to record-lows at 3.8% with average earnings forecast to climb to 5.6%.
Wednesday’s inflation data could have a similar effect on the currency if it continues to climb. On the other hand, the figures could cap gains amid fears that soaring inflation could impact household budgets.
Thursday’s interest rate decision from the BoE will be most keenly awaited by GBP investors. The central bank is currently expected to vote for a 0.5% interest rate hike. A cautious approach from the BoE could harm Sterling.
Finally on Friday, the latest retail sales figures for August could also prompt movement in GBP.
For the Australian Dollar, a slip to consumer confidence levels on Tuesday could see AUD slip.
The ‘Aussie’ could see mixed movements on Thursday. If unemployment remains at record-lows, then it could lend support to the currency. On the other hand, the latest RBA bulletin could cap gains for AUD if it echoes the central bank’s cautious tone.
Industrial production figures for China, Australia’s primary export partner, could prompt an uptick in the ‘Aussie’ if they rise as forecast.