Pound Australian Dollar (GBP/AUD) Exchange Rate Slips amid Persistent Risk Appetite
(Updated 16:43 29/11/22)
A risk-on mood kept the Pound Australian Dollar (GBP/AUD) on the defensive today. Hints that China could ease its Covid-19 restrictions continued to bolster market mood.
Hawkish comments from Bank of England (BoE) policymaker Catherine Mann helped GBP/AUD to recover some of its losses, however. Mann signalled that the central bank would continue to raise interest rates in the face of high inflation.
Mann’s comments did represent a less hawkish stance than some policymakers however, which likely limited the exchange rate’s upturn.
Speaking on Tuesday, Mann said:
‘Looking at medium-term expectations is a very important ingredient to my assessment of what the appropriate Bank Rate at the next vote might be.’
At time of writing the GBP/AUD exchange rate was at around $1.7905, which was down roughly 0.4% from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Falls amid Risk-On Mood
The Pound Australian Dollar (GBP/AUD) exchange rate is tumbling today. A return of global risk appetite is likely pushing the currency pair lower. The pair may also be seeing losses amid signs that China could tweak its ‘zero Covid’ approach.
At time of writing the GBP/AUD exchange rate is at around AU$1.7828, which is down roughly 0.8% from this morning’s opening figures.
Australian Dollar (AUD) Bolstered by Signs of Easing Chinese Covid Restrictions
The Australian Dollar (AUD) is rising today. A return of global risk appetite may be helping to boost the currency.
Signs that China may soon ease its strict Covid-19 measures could also be lending support to AUD today. Speaking on Tuesday, Chinese officials signalled that they may soon start to tweak the measures.
The statement comes after a wave of unrest across China in protest at the country’s ‘zero Covid’ approach. The prospect of further protests may continue to keep some pressure on the ‘Aussie’ today.
Hugh Gimber, global market strategist at JP Morgan Asset Management, had the following summary of the situation:
‘Positive news for the Chinese economy is positive news for the global economy.
Upbeat comments from Reserve Bank of Australia (RBA) Governor Philip Lowe may also be bolstering AUD today.
Speaking on Monday, Lowe outlined his belief that Australian economy had a strong probability of maintaining a ‘soft landing’.
Pound (GBP) Slumps as Analysts Predict Housing Market Slowdown
The Pound (GBP) is falling today. The poor outlook for the UK’s economy is likely continuing to weigh on Sterling.
UK mortgage data today may have added to the currency’s woes. Mortgage approvals fell to their lowest level since June 2020 in October.
The figures added to speculation of an imminent slowdown in the country’s housing market amid reduced demand.
Comments from Prime Minister Rishi Sunak signalling a potential shift to a more combative stance with China may also be prompting losses in GBP.
On the other hand, the currency may be seeing losses limited by market bets on a 50bps interest rate hike from the Bank of England.
GBP/AUD Exchange Rate Forecast: Will Speeches from BoE Officials Confirm Further Rate Hikes?
Looking to the week ahead for the Pound, a speech from BoE policymaker Catherine Mann later today could push the currency higher if she hints at further interest rate hikes.
Investors will also be watching BoE Governor Andrew Bailey’s testimony in front of the House of Commons later today for any signals regarding the BoE’s forward policy.
A speech from BoE chief economist Huw Pill on Wednesday will be watched with similar interest by investors.
On Thursday, the final reading of November’s manufacturing PMI could weigh on Sterling. The data is expected to confirm a contraction in the sector that could add to the UK’s poor outlook.
For the Australian Dollar, a speech from the RBA’s Jonathan Kearns on Wednesday could see the currency slip if he adds to expectations of a cautious path from the central bank.
On the other hand, a forecast uptick in the country’s consumer price index could help strengthen rate hike bets and AUD long with it. A predicted uptick in the final reading of November’s manufacturing PMI could also lend support to the ‘Aussie’.
Friday’s final retail sales figures for October could pull AUD lower if they confirm a sales downturn.
Finally for the Australian Dollar, any further rises in China’s Covid-19 case levels could weigh on the currency.