Pound Australian Dollar Exchange Rate Rangebound as Kwarteng Meets with Bank Bosses
The Pound Australian Dollar (GBP/AUD) exchange rate is trapped in a narrow range today. Investors are trading cautiously as Chancellor Kwasi Kwarteng meets with top London bankers.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.6657. Virtually unchanged from today’s opening rate.
Pound (GBP) Flat amid Concerns over UK’s ‘Irresponsible’ Budget
The Pound (GBP) is muted today, with the currency seeing a reprieve from its recent volatility.
The GBP/AUD exchange rate struck a nine-year low on Monday. As a panicked response to Chancellor Kwasi Kwarteng’s mini-budget triggered a Sterling crisis.
Kwarteng unveiled plans for sweeping tax cuts funded through increased government borrowing. Fears this would lead to an unsustainable debt pile prompted GBP exchange rates to nosedive.
The Chancellor’s budget has been branded ‘irresponsible’. Analysts have evened warned it could cause the Pound to strike parity with the US Dollar (USD) and Euro (EUR).
Kwarteng attempted to reassure London’s top bankers in a meeting with members of the UK’s financial services industry.
‘I’m confident that with our growth plan and the upcoming medium-term fiscal plan — with close co-operation with the Bank — our approach will work.’
However, this doesn’t seem to have brought much cheer to the Pound. Which only remains offs its recent due to expectations for a major rate hike from the Bank of England (BoE) in November.
Australian Dollar (AUD) Underpinned by Risk-On Flows
The Australian Dollar (AUD) is holding its ground today amid a prevailing risk-on mood.
A rise across equity markets appeared to be underpinning this upbeat mood. While a modest pullback in the US Dollar is also buying risk appetite.
However the uptick in market sentiment and the ‘Aussie’ remains limited in the face of a looming global recession and expectation for more aggressive interest rate hikes from the Federal Reserve.
Pound Australian Dollar Forecast: Slow Retail Sales Growth to Dent the ‘Aussie’?
The Pound Australian Dollar (GBP/AUD) exchange rate could tick higher overnight as Australia publishes its latest retail sales figures.
Economists forecast August’s preliminary figures will report sales growth slowed from 1.3% to 0.4%.
This could weaken expectations for the RBA interest rate decision next week. Dragging AUD exchange rates lower in the process.
Meanwhile, the fallout from Kwarteng’s mini-budget may continue to direct the Pound.
Analysts suggest the government’s economic policy could put the UK at risk of a credit ratings downgrade. An event which could see the Sterling selling bias return with vengeance.