Pound Australian Dollar (GBP/AUD) Exchange Rate Bolstered by Retreat in Risk Appetite
(Updated 16:37 02/12/22)
The Pound US Dollar (GBP/AUD) exchange rate made steady gains over the rest of today. A pullback in risk appetite bolstered the currency pair.
The change in market mood came after US jobs data this afternoon. Low unemployment and an above-forecast rise in non farm payrolls data pointed to a tight US labour market. The figures saw markets price in further interest rate hikes from the Federal Reserve.
At time of writing the GBP/AUD exchange rate is at around AU$1.8065, which is up roughly 0.4% from this morning’s opening figures.
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Pound Australian Dollar (GBP/AUD Exchange Rate Trends Sideways amid Risk-Off Mood
The Pound Australian Dollar (GBP/AUD) exchange rate is trading within a narrow range today. A risk-off mood is potentially limiting losses for the currency pair. Signs of weakness in the Australian retail sector could also be keeping GBP/AUD buoyed today.
At time of writing the GBP/AUD exchange rate was at around AU$1.7982, virtually unchanged from this morning’s opening figures.
Pound (GBP) Gains amid NI Protocol Optimism
The Pound (GBP) is firming against many of its peers today. Signs that the US Federal Reserve will slow its pace of policy tightening may be helping Sterling to climb. The currency is seeing gains limited by a risk-off market mood, however.
Signs of poor health in the UK’s retail sector could be weighing on the Pound today. Footfall in UK shops fell by 13.3% in November as the cost-of-living crisis continued to dent household spending.
The prospect of widespread industrial action later in December could also be keeping gains for Sterling limited. The NHS announced on Thursday that nurses, ambulance works, and hospital staff would be striking on 20 December.
The return of some optimism surrounding EU-UK negotiations concerning the Northern Ireland Protocol may be underpinning GBP, however.
Australian Dollar (AUD) Edges Higher as China Lifts Lockdown Restrictions
The Australian Dollar (AUD) is ticking higher today. A retreat in global risk appetite is weighing on the ‘Aussie’.
The final reading of October’s retail sales figures could also be keeping pressure on the currency. October’s sales fell by 0.2% which was the first drop in the sector in 2022.
Hawkish comments from Reserve Bank of Australia (RBA) Governor Philip Lowe may be underpinning AUD, however. Speaking on Friday, Lowe signalled that the RBA was prepared to hike interest rates further to control high inflation.
Economists are anticipating a 0.25bps rate hike from the central bank next week.
Marcel Thieliant, senior Australia economist at Capital Economics, said:
‘We had a bit of softness in the consumer spending data and a bit of a drop in inflation. That would suggest that they would stick to 25.’
The easing of Covid-19 restrictions across China may also be lending support to AUD.
GBP/AUD Exchange Rate Forecast: Will RBA Hike Interest Rates as Forecast?
Looking to the coming week for the Australian Dollar, the RBA’s interest rate decision on Tuesday will the most significant data for the currency in the coming week. The central bank is expected to hike rates by 0.25%. The RBA has been previously cautious however, and a below-forecast hike could push AUD lower.
On Wednesday, an expected rise in GDP growth data could boost the ‘Aussie’ if third quarter figures print as forecast.
The newest bulletin from the RBA on Thursday could give the Australian Dollar further impetus for movement. Investors will be looking to the document for justification of the central bank’s rate hike, as well as any hints of forward policy.
Also on Thursday, a narrowing in Australia’s trade surplus could dent confidence in the currency if figures print as forecast.
For the Pound, the final reading of November’s services PMI on Monday could weigh on the currency. The data is set to confirm a contraction in the sector which could add to the UK’s poor outlook.
On Tuesday, the latest sales data for the UK’s retail sector could prompt movement in Sterling. The British Retail Consortium’s (BRC) figures could rise if consumers spent healthily during Black Friday sales events.
Finally for the Pound, any changes in BoE rate hike bets could cause movements in the currency.