Pound Australian Dollar (GBP/AUD) Climbs as Hawkish Fed Elevates Rate Hike Bets
The Pound Australian Dollar (GBP/AUD) exchange rate is firming as the market mood sours on a hawkish Federal Reserve. With further tightening expected from the US central bank, market sentiment soured and the riskier Australian Dollar slipped. Ongoing global growth fears have once again seen a return of risk-averse trading.
At time of writing, the GBP/AUD exchange rate is around $1.9452, a 0.30% jump from this morning’s opening levels.
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GBP/AUD Wavers on Aggressive BoE Tightening
The Pound Australian Dollar exchange rate is fluctuating amid concerns of soaring interest rates could deepen a recession in the UK.
At time of writing, the GBP/AUD exchange rate is around $1.9398, relatively unchanged from this morning’s opening levels.
Pound (GBP) Pressured by Escalating Economic Concerns
The Pound (GBP) is trading listlessly this morning as relentless interest rate hikes are starting to weigh heavier on the UK economy. With the Bank of England (BoE) downgrading their inflation and growth prospects, recession fears are deepening.
As inflation remains sky high, and far above both the target rate and other major economies, economic growth is being hampered. A relentless tightening cycle from the BoE doesn’t look to be ending anytime soon, as BoE Governor Andrew Bailey has said that the central bank will keep rates ‘sufficiently restrictive for a sufficient period’.
Elsewhere, the latest REC/KPMG employment report from S&P has shown that the labour market is finally showing signs of cooling. Hiring activity has significantly slowed amid dampening economic outlook and souring business confidence. The report added:
‘The overall availability of staff meanwhile rose at a substantial pace amid the slowdown in recruitment and reports of redundancies. Notably, the latest upturn in total labour supply was the steepest recorded since October 2009 when excluding the pandemic period. Total vacancy growth meanwhile slowed further, hitting a 29-month low in July.’
Australian Dollar (AUD) Undermined by Cautious Market Mood
Meanwhile, the Australian Dollar (AUD) is also struggling for demand as investors remain concerned with further interest rate hikes from central banks.
The market mood remains subdued as volatile trading conditions last week appear to be carrying over to this week. Investors are continuing to debate over how far interest rate hikes will go, especially after the latest labour market report from the US. Mixed jobs data on Friday sent mixed signals to the markets over the Federal Reserve’s next move.
Domestically, a lack of economic data has left the risk-sensitive ‘Aussie’ exposed to market moods, as AUD investors await a string of data releases from tomorrow.
Pound Australian Dollar Exchange Rate Forecast: Souring Australian Sentiment to Dent the Aussie?
Looking ahead, the Pound Australian Dollar exchange rate could see further movement with the latest business and consumer sentiment surveys tomorrow. An expected fall in confidence from both companies and consumers could add further pressure on the Australian Dollar on economic growth concerns.
Meanwhile, the Pound, amid a lack of data, could continue to trade on market sentiment and ongoing concerns over the economic outlook.