Pound Australian Dollar (GBP/AUD) Strengthens as Downbeat US Data Weighs on Sentiment
(Updated 16:30, 6/4/23)
The Pound Australian Dollar (GBP/AUD) exchange rate is continuing to rally this afternoon. In the wake of poor US economic data, Sterling holds its strength against the riskier ‘Aussie’. Fears of a global recession return to the fray as labour market data for the US points to a stuttering US economy.
With comments on how inflation in the US is going to be ‘sticky’ going forward, further interest rate hikes from the Federal Reserve could also be weighing on market sentiment. St Louis Fed President James Bullard made the hawkish comments in the wake of initial jobless claims climbing higher than expected.
At time of writing, the GBP/AUD exchange rate is around $1.8656, a 0.54% jump from this morning’s opening levels.
Original article continues below…
GBP/AUD Firms as UK House Prices Rise
The Pound Australian Dollar exchange rate is strengthening as the UK housing market appears to be stabilising.
At time of writing, the GBP/AUD exchange rate is around $1.8599, a 0.26% climb from this morning’s opening levels.
Pound (GBP) Supported by Rebounding Housing Market
The Pound (GBP) is experiencing mixed success this morning amid a lack of major economic data. A marked rebound in housing prices could be providing a modicum of support as the market looks to be finally stabilising.
Average housing prices unexpectedly rose for the third consecutive month in March. Jumping up 0.8%, following February’s 1.2% climb, suggesting the housing market appears to be stable. Anthony Codling, Housing Analyst at Twindig, said that there is no longer a house price crash, and the rebound could continue. He added:
‘This is not the story of a house price crash, but rather one where house prices are falling upwards. In our view, three main factors have led to this positive pricing trend:
‘The mini-budget spike in mortgage rates has been reversed.
‘In a more stable financial market mortgage lenders are more willing to lend.
‘Wage increases are allowing homebuyers to secure larger mortgages.’
With the shortened week due to Easter, the trading calendar remains thin, elevated rate hike bets from the Bank of England (BoE) could be providing further support for Sterling.
Australian Dollar (AUD) Underpinned by Strong Chinese Data
Meanwhile, the Australian Dollar (AUD) remains under pressure this morning amid a cautious market mood. Global recession fears spiked once more as declines in US equities followed a series of downbeat US economic data.
However, limiting the losses for the ‘Aussie’ was strong Chinese services PMI. A good indicator of domestic demand, the service sector in China soared to its highest level since November 2020. Revealing a strong rebound since the easing of strict Covid restrictions, a sharp increase in new orders and employment boosted business.
Further providing modest support to the risk-sensitive ‘Aussie’ was the release of the Reserve Bank of Australia (RBA) semi-annual Financial Stability Review (FSR). AUD investors can be cheered by the upbeat review, as the central bank stated that ‘Australian banks are well capitalized, profitable and highly liquid.’
Pound Australian Dollar Exchange Rate Forecast: BoE Decision Makers Panel to Weigh on the Pound?
Looking ahead, the Pound Australian Dollar exchange rate could see further movement as the UK market is set to close early for the Easter weekend. The only data of note for the Pound is the release of the Bank of England (BoE) Decision Makers panel survey. With both producer and consumer price inflation expectations slipping in the February survey, further declines could be expected, denting rate hike expectations.
Elsewhere, the Australian Dollar will also head into the weekend trading on market sentiment in lieu of data. If risk appetite continues to recede, the ‘Aussie’ could slide.