Pound Australian Dollar Exchange Rate Fluctuates as UK GDP Grows by 0.1%
The Pound Australian Dollar (GBP/AUD) exchange rate is wavering after GDP growth data revealed the UK avoided a recession at the end of last year.
At time of writing the GBP/AUD exchange rate is trading around $1.8481, relatively unchanged from this morning’s opening levels.
Pound (GBP) Supported by Mild Economic Growth
The Pound is enjoying mixed success against many of its peers this morning as the Office for National Statistics (ONS) showed the UK avoided a recession at the end of last year.
Against expectations of a stagnation in Q4, the UK economy surprised to the upside and grew a modest 0.1%. After shrinking in the third quarter of 2022, economists had feared another quarter of contraction, signalling a technical recession. Darren Morgan, ONS Director of Economic Statistics, explained:
‘The economy performed a little more strongly in the latter half of the last year than previously estimated, with later data showing telecommunications, construction and manufacturing all faring better than initially thought in the latest quarter.’
However, despite avoiding a recession, the UK’s growth concerns remain. High inflation and soaring interest rates have weighed on the UK and leaves the economy only 0.6% larger than a year ago. Martin Beck, Chief Economic Advisor to the EY ITEM Club, commented:
‘The revelation from Q4 2022’s national accounts that the economy grew 0.1% quarter-on-quarter, rather than flatlining as in the preliminary estimate, therefore doesn’t carry much significance.
‘That said, alongside Q3’s contraction in GDP being revised smaller, it represents the latest in a run of upside surprises and suggests the economy has displayed a welcome degree of resilience, despite pressure from high inflation and expensive energy.’
Australian Dollar (AUD) Underpinned by Risk Appetite
Meanwhile, the Australian Dollar remains fairly quiet this morning amid a lack of major economic data. The upbeat market sentiment continues to support the riskier currencies, preventing further losses for the ‘Aussie’.
Elsewhere, better-than-expected PMIs in China helped buoy the risk-sensitive Australian Dollar. As a proxy-currency to the world’s second largest economy, the ‘Aussie’ found some modest strength in the steadily improving manufacturing sector.
Against expectations of 51.5, NBS manufacturing PMI came in at 51.9. Despite a modest slowdown from the previous month, it still signals the third consecutive month of expanding factory activity.
Pound Australian Dollar Forecast: RBA Interest Rate Decision to Sink the Aussie?
Looking ahead to next week, the Pound Australian Dollar exchange rate could see further movement with the latest interest rate decision from the Reserve Bank of Australia (RBA). With the central bank’s recent dovish turn, expectations for a pause in the tightening cycle, the Australian Dollar could slide.
Meanwhile, the Pound could rely on external pressures and market mood for influence amid a lack of major economic data.