Pound Australian Dollar (GBP/AUD) Exchange Rate Pulled Lower by Risk-On Impulse
(Updated 16:40 31/01/23)
The Pound Australian Dollar (GBP/AUD) exchange rate pared its gains on Tuesday to end close to its opening position. The pairing may have come under pressure from the IMF’s poor forecast for the UK economy as markets digested the information. Additionally, a risk-on impulse late on Tuesday may have also dented confidence in the exchange rate.
A resurgent commodities market may have also weighed on GBP/AUD today. Iron ore prices, a key driver of the Australian Dollar (AUD), rose by over 4% over the course of the day.
At time of writing the GBP/AUD exchange rate is at around AU$1.7465, which is down roughly 0.2% from this morning’s opening figures.
Original article below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Rises as Australian Retail Sales Slump
The Pound Australian Dollar (GBP/AUD) exchange rate is climbing today. A risk-off market mood may be bolstering the pairing. Additionally, a sharp slump in Australian retail sales could also be boosting GBP/AUD.
At time of writing the GBP/AUD exchange rate is at around AU$1.7612, which is up roughly 0.7% form this morning’s opening figures.
Australian Dollar (AUD) Falls after Disappointing Retail Sales Data
The Australian Dollar (AUD) is slipping today. A drastic slump in December’s retail sales may be prompting the losses for AUD today. Additionally, a retreat in global risk appetite could also be denting enthusiasm for the ‘Aussie.
December’s retail sales figures fell by 3.9% versus forecasts of a 0.3% decline. The fall represented the largest decline in the sector since August 2020 as soaring inflation and higher interest rates dented consumer spending.
Signs of a weaker economy also added fuel to speculation that the Reserve Bank of Australia (RBA) may soon slow its pace of policy tightening. These reduced bets may be pushing AUD lower.
The ‘Aussie’ may be finding some support from signs of a recovery in the Chinese economy, however. PMIs for China’s private sectors pointed to a return to growth in January amid the Lunar New Year celebrations.
Pound (GBP) Climbs Against AUD amid Risk-Off Mood, Slips Elsewhere as IMF Downgrades UK Forecasts
The Pound (GBP) is falling against many of its rivals today. Sterling may be seeing losses amid downbeat 2023 forecasts for the UK economy. On the other hand, GBP is making gains against its riskier rivals amid a cautious market mood.
The latest growth forecasts from the International Monetary Fund (IMF) are likely adding to the pressure on GBP today. The UK is expected to be the only G7 economy to shrink in 2023, with forecasts pointing to a 0.6% contraction.
Cooling public inflation expectations may also be pulling GBP lower today. Data collected by US bank Citi and YouGov indicated a fall to 3.5% in December. The data may be prompting a pullback in BoE rate hike bets and weighing on GBP today.
A slump in UK mortgage approvals may also be contributing to the Pound’s losses. Approvals fell to 35,600 in December which pointed to a cooler housing market.
GBP/AUD Exchange Rate Forecast: Will Signs of BoE Slowdown Weigh on GBP?
Looking ahead to the rest of the week for Sterling, the final reading of January’s PMIs could add to the downbeat sentiment surrounding GBP. Figures for the manufacturing sector on Wednesday and the services sector on Friday are expected to confirm respective downturns for each.
Sterling traders will be most focused on the BoE’s interest rate decision on Thursday, however. The impact of the forecast 50bps rate hike could be muted given that markets have largely priced it in.
Investors will be looking for signals regarding the central bank’s forward path regarding interest rate hikes. If BoE policymakers hint at a slowdown it could weigh on Sterling.
For the Australian Dollar, the final reading of January’s manufacturing PMI could weigh on the ‘Aussie’ on Tuesday. The data is expected to confirm a contraction in the sector for the first time in 32 months.
The final reading of January’s services sector PMI on Thursday could have a mixed effect on AUD, however. Whilst the index is forecast to confirm a contraction for the country’s dominant sector, the pace of the decline is set to slow.