Pound Australian Dollar (GBP/AUD) Holds Ground amid Risk-Off Mood
(Updated 16:48 21/04/23)
The Pound Australian Dollar (GBP/AUD) exchange rate is continuing to build on its positive momentum today.
A cautious market mood may be shoring up the pairing. A protracted decline in iron ore prices could also be bolstering the exchange rate.
Additionally, today’s UK data is likely inspiring additional Bank of England (BoE) rate hike bets. This may in turn be pushing GBP/AUD higher.
At time of writing the GBP/AUD exchange rate is at around AU$1.8565, which is up roughly 0.6% from this morning’s opening figures.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Lifted by UK PMI Figures
The Pound Australian Dollar exchange rate is climbing today. GBP/AUD may be gaining off the back of robust performance in the UK’s services sector. Additionally, a sharp downturn in the Australian manufacturing sector may be prompting gains in the pairing.
On the other hand, a slump in UK retail sales could be capping gains for the exchange rate today.
At time of writing the GBP/AUD exchange rate is at around AU$1.8853, which is up roughly 0.6% from this morning’s opening figures.
Pound (GBP) Wobbles following Above-Forecast Retail Slump, Climbs against AUD after Services Jump
The Pound (GBP) is coming under pressure today after downbeat retail sales data. A mixed market mood is helping Sterling to make gains against its riskier peers, though.
Retail sales volumes fell by more than forecast last month. March’s figures printed a drop of 0.9% versus the forecast decline of 0.5%. The data collected by the Office for National Statistics (ONS) highlighted the impact of persistently poor weather on the sector.
The overall picture for the UK’s retail sector was more optimistic, however. Stronger performance from retailers in January and February mean that the sector is showing signs of growth.
A surprise jump in April’s PMI for the UK’s dominant services sector may be underpinning Sterling today. The figures was the highest in 12 months.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:
‘The key takeaway is that the economy as a whole is not only showing encouraging resilience but has gained growth momentum heading into the second quarter, the latest PMI reading broadly indicative of GDP rising at a robust quarterly rate of 0.4%.’
Australian Dollar (AUD) Slides after Mixed PMI Data
The Australian Dollar (AUD) is tanking today following mixed PMI data overnight. A downturn in the commodity markets may also be weighing on the ‘Aussie’.
April’s PMIs indicated a stark difference between manufacturing and service sector performance in Australia. Manufacturing output fell to a 35-month low of 48.1, whilst the country’s services sector rose to a 10-month high of 52.6.
The sharp increase in the country’s services sector may be limiting AUD’s downturn today. Evidence of resilience in Australian economy is prompting markets to price in a 25bps rate hike from the Reserve Bank of Australia (RBA).
GBP/AUD Exchange Rate Forecast: Will BoE Bets Continue to Lift Pound?
The Pound will see a relatively spares data calendar over the coming week. Sterling could come under pressure on Tuesday if business confidence dips as forecast. The second quarter confidence figures, as collected by the Confederation of British Industry (CBI), are expected slump after a recovery in this year’s first quarter.
On the other hand, the CBI’s latest distributive trades figures on Thursday could lend some support to Sterling. The gauge of health in the retail sector is expected to fall from 9 to 1 for April.
GBP could be pushed higher by BoE rate hike bets over the course of next week. Markets have largely priced in a 25bps hike from the central bank at their May meeting.
A forecast drop in Australia’s inflationary pressures could weigh on AUD next week. First quarter inflation is set to dip to 6.9% which prompt a pullback in RBA rate hike bets. RBA policymakers have previously stated that future interest rate decisions will be data driven.
A lack of any other data releases for the ‘Aussie’ could leave the currency at the mercy of shifting market mood. A retreat in risk appetite could weigh on AUD.