Pound Australian Dollar (GBP/AUD) Firms after Mixed UK GDP Figures

Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs despite News of China-Aus Trade Talks

(Updated 16:40 12/05/23)

The Pound Australian Dollar (GBP/AUD) is continuing to gain ground today. The pairing may be finding support from a protracted downturn in iron ore prices.

This morning’s positive first quarter UK GDP figures may also be pushing the exchange rate higher.

On the other hand, the surprise contraction in March’s GDP may be capping the pairing’s gains. Positive signs from the latest China-Australia trade talks may also be weighing on GBP/AUD.

At time of writing the GBP/AUD exchange rate is at around AU$1.8762, which is up roughly 0.5% from this morning’s opening figures.

Original article continues below:

Pound Australian Dollar (GBP/AUD) Exchange Rate Rises amid Signs UK may Avoid 2023 Recession

The Pound Australian Dollar (GBP/AUD) exchange rate is climbing today. The pairing may be benefitting from upbeat first quarter UK GDP figures, as well as a cautious market mood.

On the other hand, a surprise March contraction in the UK’s economy could be capping GBP/AUD’s upward movement.

At time of writing the GBP/AUD exchange rate is at around AU$1.8729, which is up around 0.3% from this morning’s opening figures.

Pound’s (GBP) Gains Hobbled by Mixed GDP Data

The Pound (GBP) is making limited gains today after mixed GDP figures this morning. Cooler BoE bets may also be limiting Sterling’s upward movement.

Sterling’s rise today is likely being motivated by the upbeat first quarter GDP figures. The UK’s economy expanded by 0.1% in the first quarter of 2023. The growth figures may be shoring up forecasts that the UK will avoid a technical recession this year.

On the other hand, the UK’s economy saw a surprise 0.3% contraction in March which may be dampening enthusiasm for GBP. The cost-of-living crisis, poor weather, and ongoing industrial action were highlighted as the key drivers of the poor performance.

The GDP data also means that the UK is still the weakest G7 performer since the Covid-19 pandemic. This downbeat outlook could also be hobbling GBP’s gains today.

Australian Dollar (AUD) Pulled Lower by Risk-Off Mood

The Australian Dollar (AUD) slipped overnight and is trending lower today. A cautious market mood may be dampening enthusiasm for the risk-sensitive ‘Aussie’. A downturn in iron ore prices may also be keeping pressure on the currency.

AUD may be seeing its losses cushioned by news that China’s foreign minister is set to visit Australia in July. The visit comes amid a continued easing in tensions between the two trading partners.

Reserve Bank of Australia (RBA) rate hike bets may also be limiting AUD’s losses today. Experts highlighted the lift to household incomes in the latest federal budget as cause for additional hikes.

GBP/AUD Exchange Rate Forecast: Will Cooler UK Jobs Data Weigh on Pound?

Looking to the coming week for the Pound, jobs data on Tuesday could weigh on the currency if the figures print as forecast. Unemployment is expected to remain unchanged at 3.8% in March, its highest point since the second quarter of 2022. Markets could see the data as evidence of a cooldown in the UK’s labour market.

Alongside the unemployment figures, the BoE will be closely watching Tuesday’s wage growth figures. Average earnings growth for March is expected to cool to 4.9% from 5.9%. The data may prompt a pullback in BoE rate hike bets and push the Pound lower.

A speech from BoE Governor Andrew Bailey on Wednesday could add to GBP’s woes if he adds to expectations of rapidly cooling inflation.

The start of the week could bring mixed movements for the Australian Dollar. Whilst Monday’s consumer confidence figures are expected to decline, they are set to remain close to previous highs.

Tuesday could bring more definitively positive movements for the ‘Aussie’. The release of the latest RBA meeting minutes could lift AUD after the central bank’s surprise rate hike at its last meeting.

Also on Tuesday, forecast positive data for China’s private sector could push the Australian Dollar even higher. Output in China’s industrial sector is set to improve drastically to 10.1%. Additionally, April’s retail sales are set to rebound to 20.1%.

Finally for AUD, unemployment figures on Thursday could bolster RBA rate hike bets and keep the currency buoyed. April’s unemployment is forecast to remain unchanged at 3.5%.

Gareth Monk

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