Pound Australian Dollar (GBP/AUD) Exchange Rate Mixed as BoE Implements Further Intervention Measures
The Pound Australian Dollar (GBP/AUD) exchange rate is wavering this morning, following the Bank of England’s (BoE) announcement of linked-index intervention measures.
At the time of writing the GBP/AUD exchange rate was trading at around AU$1.7601, showing minimal change from today’s opening rates.
Pound (GBP) Falters as BoE Warns of ‘Material Risk’ to Financial Stability
The Pound (GBP) is seeing muted trade this morning, as the Bank of England warned of ‘material risk’ to financial stability early this morning and announced a further addition to its intervention measures.
The BoE aims to buy bonds which are directly linked to inflation, as gilt prices continue to rise. Currently, gilt prices are very close to the highs seen in the wake of Chancellor Kwasi Kwarteng’s mini-budget.
‘These additional operations will act as a further backstop to restore orderly market conditions by temporarily absorbing selling of index-linked gilts in excess of market intermediation capacity. As with the conventional gilt purchase operations, these additional index-linked gilt purchases will be time-limited and fully indemnified by HM Treasury.’
This emergency intervention is still due to end the coming Friday, October 14th.
Respite for the Pound came as unemployment in August dropped from 3.6% to 3.5%, hitting a near 50-year low. However, this positive news had a muted impact on GBP due to the turbulence striking the gilt market.
Similarly, while the earnings release shows wage growth printed above forecast at 6%, any headwinds this could have prompted were muted by the gulf between inflation and wages.
Australian Dollar (AUD) Wavers as Private Sentiment Sours
The Australian Dollar (AUD) is seeing mixed trade this morning, as Australian consumer and business confidence data releases paint a bleak picture.
The consumer confidence index did manage to exceed forecasts, with a drop of 0.9%, versus expectations for a 2.8% slump. This illustrates a growing national concern about the Australian economy and has dented the ‘Aussie’ in today’s session.
Australian Treasurer Jim Chalmers stated:
‘Most of the respected international analysts and commentators think that we are headed for a substantial global downturn, and we won’t be immune from that. It’s not our expectation that the Australian economy will go backwards. But the world economy is a dangerous place right now.’
Treasurer Chalmers’ confidence did little to soothe market moods, as the global risk-off attitude saw investors continue drifting from the risk-sensitive ‘Aussie’.
Pound Australian Dollar Exchange Rate Forecast: Will a Predicted GDP Stall Dent Sterling?
Wednesday sees the release of several data figures for the UK, which could further dent the Pound Australian Dollar (GBP/AUD) exchange rate.
The key presser will likely be August’s GDP figures. Markets have forecast the UK economic growth will have slowed from 0.2% to a flat 0%. This may weigh on the Pound, as the economic outlook for the UK grows sourer.
For Australia, the core catalyst of movement is likely to be global risk sentiment, as data remains scarce for the rest of the week.