Pound Australian Dollar (GBP/AUD) Exchange Rate Strengthens despite Domestic Pressures
The Pound Australian Dollar (GBP/AUD) exchange rate is firming this morning, despite domestic headlines weighing on Sterling’s appeal. This comes despite GBP falling against safer currencies, such as the US Dollar, as a souring market mood weighs on the ‘Aussie’.
At the time of writing, GBP/AUD is trading at around AU$1.7759, strengthening by roughly 0.2% from the morning’s opening rates.
Pound (GBP) Under Pressure as Strikes New Year Brings New Strikes
The Pound (GBP) is falling against safer currencies this morning, thin trading conditions brings the focus back to domestic headlines.
Industrial action across the UK is beginning to kick off again, with transportation workers beginning five days of walkouts. With the UK economy already reeling from the strikes, a continuation is souring sentiment towards Sterling this morning.
However, optimism over a future agreement could be underpinning the Pound. Tim Shoveller, the Chief Negotiator for Network Rail, has claimed a deal is ‘in touching distance’.
Shoveller further states:
‘We want to make sure that we can work with the RMT now to make clarifications where there’s been misunderstanding and put the deal out again.’
Elsewhere, a souring market mood is weighing on the increasingly risk-sensitive Pound. Should the mood continue to remain downbeat, Sterling may weaken further throughout the session.
Australian Dollar (AUD) Shrinks as Chinese Economy Contracts
The Australian Dollar (AUD) is struggling this morning, as the latest Chinese services PMI showed contraction through December.
Due to the ‘Aussie’s nature as a Chinese proxy-currency, the latest contraction is weakening the currency.
The Chinese government’s former zero-Covid policy is now firmly in the past, leading to a sharp rise in Covid cases. December was particularly harsh, leaving next to no aspect of the Chinese economy untouched.
Wang Zhe, Senior Economist at the Caixin Insight Group explained this further, stating:
‘Supply contracted, total demand remained weak, overseas demand shrank, employment deteriorated, logistics was sluggish, manufacturers faced growing pressure on their profitability.’
Elsewhere, the sluggish market mood ahead of the latest FOMC minutes tomorrow is weighing on the risk-sensitive ‘Aussie’.
Pound Australian Dollar (GBP/AUD) Exchange Rate Forecast: Risk-Averse Trade to Dent Pairing?
Looking ahead for the GBP/AUD exchange rate, tomorrow may bring risk-averse trade ahead of the latest FOMC minutes.
With the ‘Aussie’ being risk-sensitive, and the Pound increasingly looking similar, a souring market mood may weigh on the pairing.
Elsewhere for the Pound, the latest consumer credit release from the Bank of England (BoE) tomorrow morning could weigh on Sterling. Due to the UK’s continuing recession, a fall in consumer credit may reflect poorly on the UK economy.
For the Australian Dollar, the final services PMI is due to print overnight on Wednesday. Should this show a significant change, AUD may fall further.
Elsewhere, the latest Chinese services PMI is due to print on Thursday. With the ‘Aussie’ acting as a Chinese proxy-currency, the projected fall may weaken AUD as the Chinese economy contracts.