GBP/AUD Exchange Rate Tests December Low
The Pound Australian Dollar (GBP AUD) exchange rate is trading on the back foot this morning. The pairing retreating to its worst levels since the start of December.
At the time of writing the GBP AUD exchange rate is trading at around AU$1.7778. Down roughly 0.5% from this morning’s opening levels.
Australian Dollar (AUD) Strengthens as China Eases Covid Restrictions
The Australian Dollar (AUD) is on the rise this morning as AUD investors return from their Christmas holidays to the welcome news that China continues to lift its Covid restrictions.
Earlier this week Beijing announced it would drop it quarantine requirement for overseas visitors. Another major step towards fully reopening the world’s second largest economy.
As Australia’s largest trading partner, a rebound in the Chinese economy is will be seen as a major boon for the ‘Aussie’.
However at the same time, tempering the Australian Dollar’s gains are concerns over the surge in Chinese Covid cases and the possible spread of new variants within the country.
Pound (GBP) Hamstrung by Strike Concerns
While it is on the backfoot against the Australian Dollar, the Pound (GBP) is largely holding its ground against its other peers such as the Euro (EUR) and US Dollar (USD).
The return of UK traders after the Christmas break is propelling UK stocks higher this morning. In turn this lends support to Sterling.
However the Pound’s upside potential remains capped in the face of ongoing industrial action.
Rail workers, border force staff and driving examiners resume strikes today. The walkouts come as Unions push for better pay and conditions amid the cost of living crisis.
The UK’s ‘winter of discontent’ is already thought to have placed considerable pressure on economic activity in December. GBP investors fear the strikes will lead to a sizable contraction in GDP in the fourth quarter.
On the other hand, the outlook for Sterling may be improving. The Daily Mail reports a deal is ‘nearly there’ to end the rail strikes which could help limit disruption in the new year and .
Pound Australian Dollar Forecast: Thin Trading Conditions to Limit Movement?
The Pound Australian Dollar exchange rate may struggle to find momentum through the remainder of the week.
The market lull between Christmas and New Year likely limiting movement in GBP/AUD. Neither Australia or the UK are set to publish any data of note this week.
For GBP investors this could leave the focus on strike action in the UK. Could a rail pay deal bring some joy to the Pound?
Meanwhile movement in the ‘Aussie’ will remain tied to market sentiment. Could an upbeat mood help extend the Australian Dollar’s gains?