Pound Australian Dollar (GBP/AUD) Exchange Rate Bolstered by Surprise UK Growth
(Updated 09:09 10/03/23)
The Pound Australian Dollar (GBP/AUD) is gaining ground this morning. An above-forecast expansion in the UK’s economy in January may be bolstering confidence in the pairing today.
The UK’s economy grew by 0.3% in the first month of 2023. The Office for National Statistics (ONS) highlighted the return of activity across the education, health and recreation sectors as key drivers.
The optimism was tempered by the UK economy’s place in comparison to the other G7 nations, however. Analysts stated that the risk of a recession in the first half of 2023 was still high.
Yael Selfin, the chief UK economist at KPMG, said:
‘This may not be sufficient to stave off a recession in the first half of this year, as consumer spending remains weak with households continuing to be squeezed by elevated prices and higher interest rates.”
At time of writing the GBP/AUD exchange rate is at around AU$1.8149, which is up roughly 0.3% from this morning’s opening figures.
Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs amid GBP Dip-Buying
(Updated 16:35 09/03/23)
The Pound Australian Dollar exchange rate made steady gains over the course of the day. The pairing may have benefitted from some dip-buying of the Pound (GBP) today, although a lack of significant data meant that much of the movement was without a clear catalyst.
GBP/AUD’s gains may have been capped by a further rise in coal prices, however. Coal prices continued to climb over the course of the day after falling substantially earlier in the week.
At time of writing the GBP/AUD exchange rate is at around AU$1.8025, which is up roughly 0.3% from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Trends Sideways amid Risk-Off Mood
The Pound Australian Dollar exchange rate is trading in a narrow range today. The pairing may be finding support from a cautious mood in the markets.
GBP/AUD may be seeing its upward movement limited by expectations of further economic stimulus in China, however.
At time of writing the GBP/AUD exchange rate is at around AU$1.7958, which is virtually unchanged from this morning’s opening figures.
Australian Dollar (AUD) Climbs despite Cool Chinese Inflation Data
A strong performance for coal and iron ore in the commodities markets may be boosting the Australian Dollar (AUD) today. A retreat in global risk appetite could be capping gains for the ‘Aussie’, however.
The latest Chinese inflation data may be having a mixed effect on AUD today. February’s inflation for the world’s second-largest economy cooled to 1%, its slowest pace in a year. Signs of a sluggish economic recovery could be adding to pressure on AUD.
On the other hand, analysts are predicting that the figures leave plenty of room for further economic stimulus from the Chinese government. The prospect of this support may be pushing the ‘Aussie’ higher today.
Bruce Pang, chief economist for greater China at JLL, said:
‘For monetary policy, which is focused on consolidating the economic recovery and achieving stable upward momentum, there is no constraint from an inflation rate that is within the policy target.’
Pound (GBP) Edges Higher as Bets on BoE Rate Hike Pause Continue to Grow
The Pound is ticking higher against its peers today with no clear driver. A cautious market mood may be keeping pressure on Sterling amid a lack of data.
Bets on a slowdown in policy tightening from the Bank of England (BoE) could also be limiting movement for GBP today. Markets have now fully priced in a 25bps rate hike from the BoE at their next meeting. Some analysts are even expecting a pause in interest rate hikes.
Dovish comments from BoE policymaker Swati Dhingra on Wednesday may have added to these expectations.
Dhingra, a member of the BoE’s Monetary Policy Committee (MPC), said:
‘In my view, a prudent strategy would hold policy steady amidst growing signs external price pressures are easing, and be prepared to respond to developments in price evolution.’
On the other hand, Sterling may be finding support from economic forecasts by the British Chambers of Commerce (BCC). In its analysis released on Wednesday, the BCC predicted that the UK’s economy is set to shrink by less than expected.
GBP/AUD Exchange Rate Forecast: Will Expansion in UK Economy Push GBP Higher?
Looking to the remainder of the week for Sterling, GDP data on Friday could provide a boost to the currency if it prints as expected. The UK’s economy is expected to have expanded by 0.1% in January. The figures could also strengthen confidence in the UK economy and assuage fears of a protracted recession.
Also on Friday, the latest trade goods balance data could also bolster the Pound if it prints as expected. January’s goods trade deficit is expected to narrow to £-17.75bn.
Finally for GBP, any further shifts in market expectations of further BoE rate hikes could prompt movement in the Pound.
With no other data releases this week, the Australian Dollar may continue to come under pressure from the RBA’s dovish pivot.
Additionally, any changes in market mood could also affect the risk-sensitive ‘Aussie’.