Pound Australian Dollar (GBP/AUD) Exchange Rate Rallies amid £65bn Emergency BoE Intervention

Pound Australian Dollar (GBP/AUD) Strengthens as BoE Attempts to Stabilise Market

The Pound Australian Dollar (GBP/AUD) exchange rate is climbing in the wake of the Bank of England’s (BoE) emergency intervention to prevent a further financial crisis.

At time of writing, the GBP/AUD exchange rate is around $1.6740, a 0.54% jump from this morning’s opening levels.

Pound (GBP) Under Pressure after Truss’ First Appearance since Market Meltdown

The Pound (GBP) is experiencing mixed success against its peers today as markets remain concerned with the economic outlook of the UK.

Liz Truss made her first public appearance since Friday’s unveiling of the mini-budget. A series of radio interviews saw her faced with a barrage of questions about the mini-budget and the subsequent fallout. Repeated calls for reversing the fiscal policy were dismissed by Truss and reiterated that Kwarteng would not resign. Probed about the market reaction to the tax cuts, Truss replied that the government had done the right thing.

Meanwhile, following the timely intervention from the BoE in the gilt markets, the Pound continued to see wild fluctuations. A £65bn emergency bond buying scheme was implemented by the central bank in the wake of Kwasi Kwarteng’s ill-received mini-budget. Mark Carney, former governor of the BoE, has accused the Truss’ government of undermining the central bank. The comments came in the wake of the BoE stepping in to prevent a catastrophic disaster. If they hadn’t, pension funds could have collapsed. Carney added:

‘Unfortunately having a partial budget, in these circumstances – tough global economy, tough financial market position, working at cross-purposes with the Bank – has led to quite dramatic moves in financial markets.’

Australian Dollar (AUD) Softens amid Risk-Averse Market

Meanwhile, the Australian Dollar (AUD) struggled for demand today in the face of souring global market sentiments. Recession fears and the escalating situation in Ukraine weighed heavily on the risk-sensitive ‘Aussie’.

Reports have begun circulating that Russia is likely to formally absorb regions of captured Ukraine within days. Donetsk, Luhansk, Zaporizhzhia, and Kherson, are now set to join Russia. The West have since denounced the referendum as illegal. The contested areas will then be seen as part of the Russian Federation, and Putin has said that its nuclear umbrella will extend to incorporate the regions.

Lending some modest support to the Australia Dollar is news out of China that the finance ministry is intending to issue 2.5 trillion yuen (£321 billion) in government bonds to shore up the flagging economy. As Australia’s largest trade partner, a boost in China could see the ‘Aussie’ climb.

Meanwhile, falling commodity prices have kept a lid on any modest gains for the Australia Dollar.

Pound Australian Dollar Exchange Rate Forecast: BoE Speech to Bolster the Pound?

Looking ahead, major data remains thin on the ground for the rest of the session. But the Pound Australian Dollar exchange rate could see further movement when BoE Deputy Governor for Markets and Banking Dave Ramsden is set to make a speech this afternoon.

Elsewhere, any progress with the Ukraine invasion and Russia’s planned annexing could weigh on market sentiment. The ‘Aussie’ could slide further if moods continue to darken.

Danny Tingle

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