Pound Australian Dollar (GBP/AUD) Firms Despite Plummeting UK Consumer Confidence
The Pound Australian Dollar (GBP/AUD) exchange rate is climbing moderately today as UK Chancellor unveils mini-budget as consumer confidence plummets to a record low.
At time of writing, the GBP/AUD exchange rate is around $1.7007, a 0.34% jump from this morning’s opening levels.
Pound (GBP) Strengthens as Chancellor Sets out Mini-Budget
The Pound (GBP) is experiencing mixed success against its peers today as Chancellor of the Exchequer Kwasi Kwarteng unveils a myriad of tax cuts and measures to promote economic growth in the UK.
Kwarteng outlined sweeping tax cuts, scrapping the bankers’ bonus cap, and cancelling the corporation tax increase. Arguably the biggest move came with the announcement of the scrapping the 45% higher band of income tax. Fears of how these measures could benefit those better off could weigh on Sterling.
Meanwhile, mixed flash PMI data has shown that manufacturing PMI rose to 48.5, beating out estimates of 47.5 but the service sector drops to 49.2. A third consecutive month of slowing activity and the first drop in activity since February 2021. The spiralling cost-of-living crisis weighed heavily on the sector, and expectations going forward are at a 28-month low.
Further weighing on Sterling is the free-falling consumer confidence. The latest GfK consumer confidence survey fell to record lows of -49, the worst since records began in 1974. The cost-of-living squeeze continues to fuel pessimism amongst consumers. The fourth new low in five months highlights the inflationary pressures and weakening economic activity.
Australian Dollar (AUD) Wavers amid Mixed PMI Data
The Australian Dollar (AUD) is also struggling for demand as PMI data for August printed with mixed results.
The manufacturing sector rose slightly against expectations and improved over the previous month. A modest improvement of 53.9 over 53.8 in August highlights accelerating output growth in September and an increase in demand. New orders also improved, as did overseas orders.
Meanwhile, services PMI improved modestly, marking the eighth consecutive month of expansion. However, the pace of growth remains slow as the sector inched up from 50.2 to 50.4.
Pound Australian Dollar Exchange Rate Forecast: Pound to Slide Further on Borrowing Fears?
Looking ahead, a lack of major data will leave the Pound Australian Dollar open to market sentiment. With the chancellor Kwasi Kwarteng unveiling the UK’s new ‘growth plan’, the Pound could slide further on scepticism over how this could be realistically achieved.
Meanwhile, any further developments in China or Ukraine could have an impact on the global market sentiment. The ‘Aussie’ could slide further if risk-off impulses linger.