Pound Australian Dollar (GBP/AUD) Exchange Rate Slips as Mixed Market Mood Favours ‘Aussie’
(Article updated 08:46, 27/4/23) The Pound Australian Dollar (GBP/AUD) is ticking downward this morning, as a mixed market mood affects trade.
Jitters remain over fresh American bank sector troubles, but cautious optimism has been brought about by a deal to increase the US debt ceiling. This appears to be favouring the ‘Aussie’, as an increase in export prices supports the currency.
This data showed that export prices grew by 1.6% in the first quarter. As the Australian economy is heavily weighted toward exports, this may have brought cheer to AUD investors.
At the time of writing, GBP/AUD is trading at around AU$1.8839, a fall of roughly 0.2% from today’s morning rates.
Original article continues below:
Pound Australian Dollar (GBP/AUD) Exchange Rate Remains High Following Upbeat UK Retail Data
(Article updated 16:12, 26/4/23) The Pound Australian Dollar (GBP/AUD) is staying strong this afternoon, as markets digest upbeat detail pertaining to the UK’s retail sector.
The Confederation of British Industry (CBI) published their latest distributive trades index today, acting as a retail sector health check for April. The index printed above forecasts at 5, which could indicate healthier-than-expected sales over the past month.
The recent 10.1% increase in benefits and pensions is considered to be a key driver of this uptick. While initially welcomed, economists believe this boost may not be sustained over the year.
Gabriella Dickens, Senior UK Economist at Pantheon Macroeconomics, commented:
‘Households’ real spending likely will recover more slowly than incomes, given that consumers’ confidence still is weak by past standards and households that have whittled down their savings will wish to replenish them.’
On the Australian Dollar’s side, a sustained fall in iron ore prices may be coalescing with the cooldown in inflation, creating significant headwinds for the ‘Aussie’.
At the time of writing, GBP/AUD is trading at around AU$1.8866, remaining at an increase of around 0.9% from the morning’s opening rates.
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Pound Australian Dollar Exchange Rate Rallies on Sharp AU Inflation Cooldown
The Pound Australian Dollar exchange rate is strengthening this morning, following a firm cooldown in Australian inflation.
At the time of writing, GBP/AUD is trading at around AU$1.8879, a rise of around 0.9% from the morning’s opening rates.
Australian Dollar (AUD) Crumbles as Inflation Cools
The Australian Dollar (AUD) is weakening this morning, following the overnight consumer price index data release.
While headline inflation in Q1 printed above forecasts, it still cooled substantially from 7.8% to 7%. Furthermore, monthly CPI cooled below forecasts, printing at 5.4% down from 6.8%.
Robert Carnell, Regional Head of Research for Asia-Pacific, commented:
‘If there is no repeat of last year’s food and energy price spikes, then it is just possible that inflation will fall back within the RBA’s 2-3% inflation target range when the December CPI data is released in early 2024, a full year ahead of the RBA’s forward guidance for inflation.’
Because of the cooldown, investors are now pricing in a 9% chance of a further hike from the Reserve Bank of Australia. Furthermore, cuts later this year are being considered, likely weighing heavily on the ‘Aussie’.
Furthermore, iron ore prices are falling sharply at the time of writing having dropped by roughly 2.7%. As one of Australia’s primary exports, the falling prices could be weighing on AUD.
Pound (GBP) Climbs amid Cheery Trade
The Pound (GBP) is enjoying support this morning, as risk appetite appears to have returned to the markets.
As Sterling holds an increasingly risk-sensitive side, the cheery trade is drawing investors to buy GBP. Furthermore, after GBP softened during yesterdays trade, there may be an element of dip-buying underpinning Sterling.
Elsewhere, persistently hawkish rhetoric from Bank of England (BoE) policymakers could be yielding further support.
Ahead of May’s interest rate decision, various inflationary releases are indicating a cooldown going at a snail’s pace. With the cost-of-living crisis remaining a consistent pressure on UK consumers, inflation is seen to remain above acceptable levels.
Because of this, markets are expecting at least one additional 25bps hike in May, and see potential for future hikes beyond this.
However, GBP may be unable to consolidate these gains over the course of the session. With data releases largely thin on the ground, Sterling could lack firm direction during trade.
GBP/AUD Exchange Rate Forecast: Australian PPI to Buoy AUD?
Looking ahead for the Australian Dollar, on Friday the quarterly producer price index data could provide some impetus.
Australian PPI is currently expected by economists to have increased by 0.1% in Q1, which could bring support to AUD. While the Reserve Bank of Australia (RBA) elected to pause their tightening cycle, this uptick in PPI could prompt a re-evaluation of this stance.
Elsewhere, China’s year-to-date industrial profits could bring support to the ‘Aussie’. While remaining in loss territory, forecasts expect them to have shrunk. Because of this, the Chinese proxy-currency could enjoy tailwinds.
Meanwhile, the Pound is due to see little in the way of impactful data releases through to the week’s end. As such, market mood could be the main driver of movement – if upbeat trade continues, Sterling could benefit.