Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs amid Debt Ceiling Deadlock
(Updated 26/5/23, 09:00)
The Pound Australian Dollar (GBP/AUD) exchange rate is trading narrowly as UK retail sales beat forecasts and improved by 0.5%. A resilient retail sector is buoying GBP investors on elevated interest rate hike bets.
Meanwhile, optimism has returned to the fray surrounding the ongoing US debt limit negotiations. A deal is rumoured to be close, buoying market sentiment, and keeping the risk-sensitive ‘Aussie’ supported.
At time of writing the GBP/AUD exchange rate is trading around $1.8954, relatively unchanged from this morning’s opening levels.
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GBP/AUD Exchange Rate Climbs amid Debt Ceiling Deadlock
(Updated 25/5/23, 17:00)
The Pound Australian Dollar exchange rate is holding its strength this afternoon as the market mood grows darker. Fears of a cash crunch if a deal is not made by June 1 is spooking investors, and the risk-sensitive ‘Aussie’ remains under pressure.
At time of writing the GBP/AUD exchange rate is trading around $1.8947, a 0.24% climb from this morning’s opening levels.
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GBP/AUD Exchange Rate Firms on Investor Anxiety
The Pound Australian Dollar exchange rate is strengthening modestly amid fears over the US debt limit negotiations. A stalling in talks has stoked a risk-averse market as the US creeps closer to defaulting on their debts.
At time of writing the GBP/AUD exchange rate is trading around $1.8949, a 0.29% jump from this morning’s opening levels.
Australian Dollar (AUD) Undermined by Risk-Averse Market
The Australian Dollar (AUD) is struggling against its peers as a downbeat market mood weighs heavy.
The risk-sensitive ‘Aussie’ remains under pressure as the US debt ceiling negotiations drag on. Talks have once again stalled, the optimism from earlier in the week fades as the June 1 deadline fast approaches. Financial catastrophe could sweep through the markets if talks fail. The White House and Republicans are still some way off from agreeing on raising the debt limit.
Elsewhere, minutes released from the Federal Open Market Committee (FOMC) showed that US policymakers were split over whether to pause the interest rate hike cycle. But it also revealed that further rate hikes are on the table:
‘Almost all participants stated that, with inflation still well above the Committee’s longer-run goal and the labor market remaining tight, upside risks to the inflation outlook remained a key factor shaping the policy outlook.’
A gloomy global market sentiment, compounded by further soaring borrowing costs, the risk-sensitive ‘Aussie’ could remain under pressure heading into the weekend.
Pound (GBP) Supported by Elevated Rate Hike Bets
Meanwhile, the Pound (GBP) is remaining relatively supported this morning as investors continue to price in further interest rate hike bets from the Bank of England (BoE).
In the wake of stronger-than-expected inflation, especially red-hot core inflation, GBP investors are confident of further interest rate rises. The markets have now priced in a 100% probability of another 25bps rate hike at the next BoE meeting. Beyond June remains in question, but with inflation remaining far above the target rate of 2%, the BoE still has work to do.
Pound Australian Dollar Forecast: Rebounding Retail Sales to Boost Sterling?
The Pound Australian Dollar exchange rate could see movement with the release of UK retail sales. An expected rebound from last month’s disappointing 0.9% slump, sales are expected to climb by 0.3%.
In the meantime, an unofficial; preview of the retail sector will be seen with the Confederation of British Industry’s (CBI) latest sales data. The trade survey is predicted to improve for the third straight month, with a vastly improved score of 10. The resilience of the retail sector could buoy GBP investors.
As for the Australian Dollar, risk sentiment could continue to dominate movement amid a lack of economic data. Any progress in the US debt limit negotiations could see the ‘Aussie’ climb on optimism, or tumble if talks stall.