Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs as UK GDP Figures Calm Recession Fears
(Updated 16:39 10/03/23)
The Pound Australian Dollar (GBP/AUD) exchange rate continued to gain ground today. The pairing is likely continuing to find support from above-forecast UK GDP figures this morning. Reduced fears of a recession for the UK in the first half of 2023 may also be bolstering GBP/AUD.
Modupe Adegbembo, G7 Economist at AXA Investment Managers, said:
‘The stronger than expected start to Q1 suggests it may be possible for the UK to avoid a technical recession, but the data reflects a rebound following sharp declines in December impacted by strikes across sectors and points less to stronger underlying growth momentum.’
A weaker US Dollar (USD) following the latest non farms payrolls figures could also be lending support to the pair today. Sterling investors had previously balked at the prospect of further interest rate hikes from the US Federal Reserve.
At time of writing the GBP/AUD exchange rate is at around AU$1.8214, which is up roughly 0.7% from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Rises amid Cautious Mood
The Pound Australian Dollar exchange rate is climbing today after above-forecast UK GDP figures. A cautious market mood ahead of key US data may also be benefitting the pairing.
At time of writing the GBP/AUD exchange rate is at around AU$1.8175, which is up roughly 0.4% from this morning’s opening figures.
Pound (GBP) Climbs after Surprise 0.3% Growth
The Pound (GBP) is likely being bolstered by better-than-expected GDP figures today. The UK’s economy expanded by 0.3% in January versus forecast of 0.1% growth.
The Office for National Statistics (ONS) highlighted the widespread return of activity in the education, health and recreation sectors as the key drivers of the rise. Additionally, some experts feel that the growth may help to stave off a recession in the first half of 2023.
Speaking on the data, chief economist at KPMG UK Yael Selfin said:
‘We expect the current downturn to be shallower and shorter than previously thought, with stronger business sentiment and a steady fall in inflation expected to support the recovery in the second half of the year.’
The optimism over the data could be short-lived, however. Analysts have emphasised the fact the UK’s economy is still lagging well behind its G7 rivals..
Australian Dollar (AUD) Pulled Lower by Risk Appetite Pullback
The risk-sensitive Australian Dollar (AUD) is slipping today amid a cautious market mood. The Reserve Bank of Australia’s dovish pivot earlier this week may also be continuing to keep pressure on AUD.
Speaking after the RBA’s 25bps interest rate hike on Tuesday, Governor Philip Lowe signalled that the central bank was close to a rate hike pause:
‘With monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy.’
Fears of a weaker recovery than first expected in China could also be weighing on the ‘Aussie’ today. After softer-than-expected inflation data yesterday, markets are now anticipating that the country could take longer to recover from its ‘zero Covid’ measures.
GBP/AUD Exchange Rate Forecast: Will Persistent UK Wage Growth Prompt Fresh BoE Bets?
Looking to the coming week for the Pound, UK jobs data on Tuesday could have a mixed effect on Sterling if it prints as forecast. An expected rise in January’s unemployment rate could prompt a further pullback in BoE bets amid signs of a cooler labour market.
On the other hand, an uptick in average earnings could increase fears of wage-price spiral and push GBP higher.
Sterling will see no other major data releases next week. Any significant shifts in BoE rate hike bets could prompt further movement in the Pound.
For the Australian Dollar, an expected rise in consumer confidence overnight on Monday could bolster the ‘Aussie’. A forecast drop in business confidence could temper any gains for AUD, however.
Australian jobs data on Thursday could push the ‘Aussie’ higher if it prints as forecast. February’s unemployment rate is set to slip to 3.6%. If the figures remain close to previous lows, it could prompt speculation of tightness in the country’s labour market.
Finally for AUD, data releases from China on Wednesday could prompt a rise in the currency if it prints as forecast. Both industrial production and retail sales are expected to recover sharply.