Pound Australian Dollar (GBP/AUD) Rallies on Downbeat Market Moods
The Pound Australian Dollar (GBP/AUD) exchange rate soars as further downbeat Chinese data exacerbated global growth slowdown fears.
At time of writing, the GBP/AUD exchange rate is around $1.9548, a 0.52% plunge from this morning’s opening levels.
Australian Dollar (AUD) Plummets on Global Growth Fears
The Australian Dollar (AUD) is tumbling this morning after the latest trade data from China points to further slowdown in the global economy.
The world’s second-largest economy posted a bigger-than-expected trade surplus in July as imports drastically fell. Weakening domestic demand highlighted the stuttering Chinese economy as the country struggles with its post-Covid recovery. Another downbeat Chinese data release only serves to threaten recovery prospects, and a dampening wider market mood. Julian Evans-Pritchard, Head of China Economics at Capital Economics, commented:
‘Most measures of export orders point to a much greater decline in foreign demand than has so far been reflected in the customs data.
‘And the near-term outlook for consumer spending in developed economies remains challenging, with many still at risk of recessions later this year, albeit mild ones.’
Pound (GBP) Undermined by Economic Woes
The Pound (GBP) is finding mixed success against its peers today. But is soaring against the riskier currencies on a downbeat market mood.
But the overall mood surrounding Sterling is that of concern. With inflation remaining stubbornly high, the Bank of England (BoE) could feel the need to continue tightening to rein it in. However, economists are becoming concerned with the ongoing impacts of sky-high interest rates. With fears of the UK trapped in a low growth state, the economic outlook is weighing on demand.
Elsewhere, the unofficial retail sales estimate was released, and despite another increase, retail sales growth has appeared to slow from the 4.2% jump in June to just 1.8% in July. It represented the lowest reading in nine months amid torrid weather and high inflationary pressures. Helen Dickinson, Chief Executive at the British Retail Consortium, commented:
‘The slowing pace of retail price inflation fed through into slower sales this July. Spend was further depressed by the damp weather, which did no favours to sales of clothing, and other seasonal goods. Online spending was down again year on year as the post-Covid trend back to stores continued, leading to the lowest proportion of non-food sales online since the pandemic began.’
Pound Australian Dollar Exchange Rate Forecast: Souring Market Mood to Keep Aussie Down?
Looking ahead, amid a lack of data, the Pound Australian Dollar exchange rate could remain elevated amid downbeat risk sentiment. Without any major economic data until late in the week, both the Pound and the Australian Dollar could continue to trade on market sentiment alone.
Economic woes beset both pairings but with the riskier ‘Aussie’ being more susceptible to escalating global growth fears. With China continuing to struggle with their post-Covid recovery, and concerns over relentless interest rate hikes denting growth prospects, the Australian Dollar could fare worse.