Pound Australian Dollar Exchange Rate Muted as Hunt Delays Fiscal Statement
The Pound Australian Dollar (GBP/AUD) exchange rate is trading narrowly this morning, as investors reacted to the delay of 31 October’s fiscal plan.
At the time of writing, GBP/AUD is trading at around AU$1.7921 showing little movement from the morning’s opening rates.
Pound (GBP) Falters amid Fiscal Plan Delay
The Pound (GBP) is weakening this morning erasing some of the gains made over the last week, following the delay of 31 October’s fiscal statement.
Markets are beginning to react uneasily to the news, despite the statement’s expansion into a full budget. The caution is born from the budget now coming after the Bank of England’s (BoE) interest rate decision, scheduled for 3 November.
As such, the fiscal policy of the UK is returning to a touch of uncertainty, despite Sunak’s aims to calm markets. While GBP is faltering this morning, the losses are minimal compared to the gains made over the last couple of days.
Laith Kalaf, head of investment analysis expanded upon the delay’s consequences. He stated:
‘It does leave the Bank of England flying somewhat blind on fiscal policy when it makes its interest rate decision next Thursday’.
As such, the BoE may take a more dovish approach to rate hikes, as they await further information from the treasury.
Australian Dollar (AUD) Mixed amid Drop in Chinese Profits
The Australian Dollar (AUD) is seeing muted trade in today’s risk-on market, as its status as a Chinese proxy-currency undercuts its risk-sensitive nature.
With Chinese industrial profits falling by 2.3%, questions are gathering over the health of China’s economy. As the country follows a zero-covid policy, factories have to shut as soon as an infection is detected, limiting their capacity to function.
Elsewhere, Chinese emerging industries PMI data also pointed to a weak start in the next quarter. Analysts from Goldman Sachs expanded upon this, stating:
‘High-frequency data including emerging industries PMI (EPMI), new home sales, auto sales, transportation and long holiday tourism revenue pointed to a likely weak start in Q4.’
The news is seeing the ‘Aussie’ endure headwinds and is limiting gains that it could make during today’s session.
This countered the inflation data released on Wednesday, which prompted investors to question the Reserve Bank of Australia’s (RBA) attitude towards rate hikes.
Pound Australian Dollar (GBP/AUD) Exchange Rate Forecast: UK CBI Figures in Focus
Looking ahead for the GBP/AUD exchange rate, later today sees the release of distributive trade figures from the Confederation of British Industry (CBI).
With the UK’s economic future already seeming downbeat, if the figures print as forecast they may dent GBP further.
For AUD, Friday sees the release of Q3’s PPI data. A spike in producer prices in the last quarter could reinforce expectations for future interest rate hikes from the RBA.
Elsewhere, domestic news within the UK may also affect the pairing. GBP investors will be keeping a close eye on Sunak’s policy priorities.