Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs amid Risk-Off Mood
(Updated 16:32 06/12/22)
The Pound Australian Dollar (GBP/AUD) exchange rate reversed its losses to climb throughout the rest of the day. The exchange rate benefitted from a volatile market mood that helped to boost Sterling despite domestic headlines. A risk-off market mood also helped the currency pair to climb today.
Gains for GBP/AUD were limited by further signs of a weakening economy in the UK. The country’s construction PMI registered almost stagnant expansion in the sector as economic uncertainty weighed on building development.
At time of writing the GBP/AUD exchange rate was at around AU$1.8215, which is up roughly 0.2% from this morning’s opening figures.
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Pound Australian Dollar (GBP/AUD) Exchange Rate Slides as RBA Hikes Interest Rates
The Pound Australian Dollar (GBP/AUD) exchange rate is falling today. Concerns over the impact of industrial action on the UK economy could be pushing the pair lower today. Additionally, bets on further interest rate hikes from the Reserve Bank of Australia (RBA) may also be causing GBP/AUD to slip.
At time of writing the GBP/AUD exchange rate is at around AU$1.8127, which is down roughly 0.3% from this morning’s opening figures.
Australian Dollar (AUD) Bolstered by Bets on Further RBA Rate Hikes
The Australian Dollar (AUD) is climbing today after the RBA’s latest interest rate decision. The easing of Covid-19 curbs across China may also be bolstering the ‘Aussie’.
The RBA’s hawkish rhetoric following its latest interest rate decision is likely boosting the Australian Dollar today. Whilst the 25bps rate hike was in line with market expectations, Governor Philip Lowe signalled that interest rates would likely go higher.
Speaking in a statement after the decision, Lowe said:
‘The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.’
Economists agreed that inflationary pressures would force the RBA to hike rates further.
David Plank, head of Australian economics at ANZ, said:
‘We think inflation and wages growth will prove to be too high for the RBA to stop hiking anytime soon. We expect a 25bp increase in February, after the December quarter CPI.’
A further pullback in China’s Covid-19 restrictions could also be helping AUD to climb today. Beijing residents have been allowed back into parks, supermarkets, offices, and airports without proof of a negative Covid test.
Pound (GBP) Drops amid Fears Strikes Could Hurt Hospitality Sector
The Pound (GBP) is slipping today. Fears that widespread industrial action could harm the UK’s economic growth may be weighing on Sterling today.
UK hospitality sector heads warned today that widespread rail strikes in December could dent profits over the Christmas period.
Further signs of the impact of soaring inflation on the UK economy could also be denting confidence in GBP today. The latest spending survey from Barclaycard indicated that consumer spending lagged well behind the pace of inflation.
On the other hand, Sterling may be finding support from an easing of inflationary pressures. Grocery inflation edged lower in November but remained close to record highs.
GBP/AUD Exchange Rate Forecast: Will RBA Policymakers Reinforce Hawkish Stance?
Looking to the week ahead for the Australian Dollar, a drop in service sector activity could weigh on the currency later today. November’s group services index is forecast to slide although a slowdown in the pace of contraction could limit losses.
On Wednesday, a rise in third quarter GDP growth could boost the ‘Aussie’ if figures print as forecast. The economic expansion is expected to slow however which could weigh on AUD.
Also on Wednesday, a speech from RBA assistant governor Brad Jones could push the currency higher if he signals further interest rate hikes from the central bank.
The latest bulletin from the RBA on Thursday could have a similar effect if it outlines a hawkish forward path.
Friday’s drop in China’s November inflation figures could also help AUD to climb. November’s rate is expected to cool which could help ease pressure on the world’s second largest economy.
For the Pound, the latest house price data on Wednesday could pull the currency lower if figures slip as forecast.
The wave of industrial action set to hit the UK in the coming weeks could also see Sterling slip.