Pound Australian Dollar (GBP/AUD) Exchange Rate Soars amid Reports of Further Mini-Budget U-Turns
(Updated 14:05, 13/10/22) The Pound Australian Dollar skyrocketed this afternoon to a near seven month high, as rumours began to circulate of further U-Turns on Chancellor Kwasi Kwarteng’s mini-budget. At the time of writing, GBP/AUD is trading at around AU$1.8075, a leap of around 2.2% from the morning’s rates.
Per reports from Sky News, top ministers within the Conservative government are discussing scrapping further unfunded tax cuts from the mini-budget. This speculation revolves around a possible change or delay to planned cuts in dividend or corporation tax.
Despite these only being rumours, the Pound has strengthened across the board with substantial gains made against all major peers.
This news could remain the focus for GBP investors. Should the U-Turn be confirmed, GBP/AUD could continue to rally. If Prime Minister Liz Truss and Chancellor Kwarteng stick to their word however, Sterling may plunge once more.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Subdued as BoE Intervention Approaches End
The Pound Australian Dollar (GBP/AUD) exchange rate is flat this morning, as markets await further news from the Bank of England (BoE).
At the time of writing, the GBP/AUD exchange rate was trading at roughly AU$1.7671, showing minimal change from the morning’s opening rates.
Pound (GBP) Flat as Bond Yields Fall Back
The Pound (GBP) is stuck in a narrow range this morning, showing little movement against its peers.
This comes as the Bank of England’s (BoE) emergency bond intervention is due to draw to a close, with BoE Governor Andrew Bailey ruling out a further extension of the programme.
However, market analysts are expecting the central bank to provide further aid to the market, as the UK gilt market remains volatile.
Mohamed El-Erian, the president at Queens College Cambridge, stated:
‘A central bank is like a doctor. If the patent is really ill and even if the patient has misbehaved it is very difficult for a doctor to walk away. So the reality of central bank emergency interventions is that they tend to continue for longer than what is expected and central banks simply will not walk away.’
While UK gilt yields have seen a slight recovery this morning from yesterday’s heights, it remains to be seen if the Pound will continue to hold its ground as the BoE deadline draws ever closer.
Australian Dollar (AUD) Mixed amid Risk-Averse Market
Meanwhile, the Australian Dollar (AUD) is seeing similarly muted trade this morning, with little movement seen against its peers.
The global market mood is currently risk-off, leaving risk-sensitive currencies like the ‘Aussie’ on the defensive while bearish investors move towards safe-haven currencies such as the US Dollar.
A generally downbeat global outlook is compounding the risk-aversion, with wider news affecting AUD, such as the looming energy crisis in the Eurozone.
This was highlighted by Australian Treasurer Jim Chalmers, who stated:
‘We can expect substantial downgrades to the global growth outlook in the Budget.’
Australia’s trading connection with China is also impacting AUD in today’s trading session, as fresh lockdowns in Shanghai sap sentiment towards the Australian Dollar.
Pound Australian Dollar (GBP/AUD) Exchange Rate Forecast: BoE in Focus
The Pound could see some volatility as markets speculate regarding the future of the BoE’s emergency bond purchases. Through the rest of today’s session, investors will be keeping an eye on any further news from the central bank.
Data releases are scarce for the UK in the remainder of the week, and as such any domestic news is likely to be the key catalyst of movement for GBP.
With the Australian Dollar , data releases are also scarce. As such, eyes will be on the global market with developments in the Ukraine-Russia conflict and any significant US or Chinese releases likely to affect the ‘Aussie’.