Pound Australian Dollar (GBP/AUD) Exchange Rate Falls amid Prospect of Chinese Stimulus
(Updated 16:47 09/06/23)
The Pound Australian Dollar (GBP/AUD) exchange rate is deepening its losses this afternoon. An improving market mood may be weighing on the currency pairing.
Additionally, the prospect of further stimulus measures from the People’s Bank of China (PBOC) could be denting confidence in the exchange rate. Markets are anticipating the Chinese central bank to act after this morning’s disappointing inflation data for the world’s second largest economy.
At time of writing the GBP/AUD exchange rate is at around AU$1.8660, which is down roughly 0.3% from this morning’s opening figures.
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Pound Australian Dollar (GBP/AUD) Exchange Rate Edges Lower despite Signs of Chinese Disinflation
The Pound Australian Dollar exchange rate is on the defensive today. Higher commodity prices and Reserve Bank of Australia (RBA) rate hike bets may be pushing the pair lower.
On the other hand, disappointing Chinese inflation figures and the prospect of a recession in Australia could be limiting GBP/AUD’s downside. A mixed market mood may also be supporting the exchange rate.
At time of writing the GBP/AUD exchange rate is at around AU$1.8680, which is down roughly 0.2% from this morning’s opening figures.
Australian Dollar’s (AUD) Gains Tempered by Possible Recession Risks
The Australian Dollar (AUD) is ticking higher today. A sharp rise in the price of iron ore and persistent bets on further RBA rate hikes may be lifting the currency.
Conversely, the prospect of additional policy tightening from the central bank may also be hobbling the ‘Aussie’ today. Some economists are predicting that higher interest rates could push the Australian economy into a recession.
Disappointing inflation data from China could also capping AUD’s gains. China’s PPI reading for May saw factory gate prices fall at their fastest rate since February 2016. The figures added to fears that the world’s second-largest economy may soon see disinflation.
A below forecast rise in China’s CPI also added to the country’s poor outlook. May’s rate of inflation rose by 0.2% versus forecast of a 0.3% increase.
Finally, a mixed market mood may be dampening enthusiasm for the risk-sensitive Australian Dollar.
Pound (GBP) Treads Water amid Sparse Data Calendar
The Pound (GBP) is drifting lower today. Thin trading conditions may be prompting muted bets on the currency.
Sterling investors may also be holding off any significant bets ahead of next week’s employment data. Markets will be looking to the figures for signs of any additional pressure on the Bank of England to raise interest rates.
Current BoE interest rate expectations may be cushioning the Pound’s losses today, however.
GBP/AUD Exchange Rate Forecast: Will Signs of Cooler UK Labour Market Dent Confidence in GBP?
Looking to next week, Pound investors will be looking to Tuesday’s employment data for any hints of how it might affect the BoE’s forward policy. April’s unemployment rate is expected to remain unchanged at its highest point since November 2021 which could weigh on GBP.
Additionally, the UK economy is expected to have shed 20,000 jobs in March. These signs of a cooler labour market could cause a pullback in BoE bets and pull Sterling lower.
On the other hand, Wednesday’s GDP figures could help restore some confidence in the Pound if they print as forecast. The UK’s economy is set to have expanded by 0.3% in April.
For the Australian Dollar, the latest consumer and business confidence figures on Tuesday could bolster AUD if they print as forecast. June’s consumer confidence reading is set to recover from its May lows.
Additionally, May’s business confidence is set to continue to rise into positive territory. The reading will be the index’s highest since January 2023.
On Thursday, Australian jobs data could have a mixed effect on the ‘Aussie’ if they print as expected. Whilst May’s unemployment is expected to remain at its highest point since May 2022, the Australian economy is set to forecast to have added 20,000 jobs. The signs of robust labour demand could prompt some gains in AUD. The figures could also prompt fresh RBA bets.
Also on Thursday, the latest data releases for China’s private sector could dent confidence in the ‘Aussie’. May’s production figures for the country’s industrial sector are set to slow alongside cooler retail sales data.