Pound Australian Dollar (GBP/AUD) Weakens amid Unrelenting Inflationary Pressures
The Pound Australian Dollar (GBP/AUD) exchange rate is trading narrowly this morning as UK food prices surged by 11.6%, exacerbating the cost-of-living crisis.
At time of writing, the GBP/AUD exchange rate is around $1.7876, a 0.45% drop from this morning’s opening levels.
Pound (GBP) Undermined by Cost-of-Living Crisis
The Pound (GBP) is struggling for a clear direction against its rivals this morning as food prices continue their unrelenting surge. With the energy crisis and the Ukraine invasion unabating, food prices are soaring at fastest rate on record.
The British Retail Consortium (BRC) reports that the cost of fresh food jumped by 13.3% YoY in October, the biggest increase since records began in 2005. Shop prices in general also saw another jump as they increased 6.6% in the month of October. Helen Dickinson OBE, Chief Executive of the BRC, warned that retailers will find it difficult not to hike prices again in the run up to Christmas, and adds:
‘Prices were pushed up because of the significant input cost pressures faced by retailers due to rising commodity and energy prices and a tight labour market.
‘While some supply chain costs are beginning to fall, this is more than offset by the cost of energy, meaning a difficult time ahead for retailers and households alike.’
Meanwhile, the Royal Mail have announced they intend to strike on Black Friday. Continued disputes over pay and conditions will see postal workers set to walk out on the busiest online shopping days. Communication Workers Union (CWU) have announced strikes on 24 and 25 November, then again on 30 November and 1 December.
Australian Dollar (AUD) Buoyed by Risk-On Market Mood
Meanwhile, the Australian Dollar (AUD) recovered modestly overnight in the wake of seemingly positive news out of China.
The ‘Aussie’ was able to shrug off some of its losses after the Reserve Bank of Australia (RBA) opted for a dovish 25bps rate hike yesterday. But comments from Governor Philip Lowe reassured investors of further rate hikes.
Rumours began circulating of China reconsidering its strict zero-Covid policy and could have inspired some confidence in AUD investors. However, a Chinese foreign ministry spokesman later denied the news, saying he was unaware of the situation.
Pound Australian Dollar Exchange Rate Forecast: Hawkish BoE Hike to Boost Sterling?
Looking ahead, the Pound Australian Dollar exchange rate could see a reversal if the Bank of England (BoE) meets expectations of a bumper 75bps rate hike.
Meanwhile, the Australian Dollar could see further movement with the release of services PMI today. An expected contraction in the service sector could see the ‘Aussie’ slip with the first contraction since January.