Pound Australian Dollar (GBP/AUD) Exchange Rate Drops amid Improving Risk Appetite
(Updated 16:45 08/11/22)
The Pound Australian Dollar (GBP/AUD) exchange rate continued to fall today. A return of global risk appetite weighed on the currency pair.
Further warnings of poor performance for the UK’s services sector in the coming months may have also pushed GBP/AUD lower.
Night Time Economy Adviser for Greater Manchester, Sacha Lord, said:
‘The stark truth is that hospitality businesses are paying more for ingredients, energy and day to day business needs than they were this time last year, and we are seeing venues shutting due to financial difficulties on a daily basis.’
At time of writing the GBP/AUD exchange rate was at around AU$1.7708, which is down roughly 0.4% from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Drops as BoE Outlines UK Recession
The Pound Australian Dollar (GBP/AUD) exchange rate is slipping today. Further confirmation that the UK is set to enter a deep recession is likely weighing on the currency pair. Additionally, a gloomy outlook for the UK’s retail sector may also be pushing GBP/AUD lower.
At time of writing the GBP/AUD exchange rate is at around AU$1.7703, which is down roughly 0.4% from this morning’s opening figures.
Pound (GBP) Pushed Lower by Further Recession Confirmation
The Pound (GBP) is dropping today after experiencing some dip-buying overnight. Poor data for the UK’s retail sector is likely weighing on Sterling today.
Whilst retail sales figures data indicated an uptick in October, surveys of the sector painted a more downbeat picture. Paul Martin, UK head of retail at KPMG, stated that the figures were in fact worse than printed and did not take inflationary pressures into account.
Supermarket inflation figures also painted a poor picture for UK businesses and consumers. Grocery prices rose by around 14.7% year-on-year in October, the highest reading on record.
Confirmation that the UK is entering a recession from BoE policymaker Huw Pill today could also be pushing Sterling lower. Pill did commit to further interest rate hikes which may have underpinned the currency.
Deutsche Bank’s chief UK economist Sanjay Raja added to Pill’s predictions of a deep recession for the UK:
‘Headwinds to the UK economy will almost inevitably push the economy into recession, with global growth slowing, confidence deteriorating, and persistently high inflation and rising interest rates squeezing disposable incomes further.’
Australian Dollar (AUD) Edges Higher Despite China Covid Surge
The Australian Dollar (AUD) is ticking higher today despite a risk-off market mood. A rise in October’s business activity may be lending support to the ‘Aussie’.
The business confidence slipped to 0 last month, although reports indicated that consumer activity remained buoyant.
NAB chief economist Alan Oster said:
‘Consumers continue to spend despite headwinds from inflation and interest rates, and that run of strength looks to have carried on into October.’
Expectations of an imminent slowdown could be weighing on AUD today.
A further rise in China’s Covid-19 case levels may also be capping gains for the ‘Aussie’ today. Figures for Monday climbed to 7475 cases nationwide, with manufacturing hub Guangzhou becoming the latest epicentre.
GBP/AUD Exchange Rate Forecast: Will BoE Speech Add to Poor UK Forecast?
Looking to the week ahead for the Pound, a speech from BoE policymaker Silvana Tenreyro could weigh on the currency if she adds to the central bank’s downbeat forecasts.
Friday’s GDP data could also push Sterling lower. September’s GDP data is forecast to show a further contraction in the UK’s economy. If the figures print as expected then it is likely to add to the BoE’s dire predictions.
Additionally, third quarter GDP growth is also set to dip which could keep pressure on Sterling.
For the Australian Dollar (AUD), Wednesday’s speech from Reseve Bank of Australia (RBA) Deputy Governor Michelle Bullock could lend support to AUD if she commits to further rate hikes.
Thursday’s consumer inflation figures could also add to rate hike bets and push the ‘Aussie’ higher.