Pound Australian Dollar (GBP/AUD) Exchange Rate Driven by External Factors
The Pound Australian Dollar (GBP/AUD) exchange rate rebounded this morning after stumbling overnight, with a lack of economic data exposing the currency pair to volatility.
At the time of writing, GBP/AUD is trading at around AU$1.9098, having climbed from an earlier low of AU$1.9028 to reach its overnight highs.
Australian Dollar (AUD) Slips as Sentiment Sours
The Australian Dollar (AUD) is retreating against the Pound (GBP) this morning, trimming the gains it made overnight, as a souring market mood weighs on the risk-sensitive currency.
Last night saw the ‘Aussie’ strengthen amid a rally in commodity prices. Material exports are an important part of the Australian economy, with iron, coal, petroleum and gold among some of its most profitable exports.
Petroleum, gold and iron all appreciated in value overnight, with iron currently up 1.3% on the day. These rising prices for crucial Australian commodities helped the resource-linked currency strengthen.
However, AUD is trimming its gains today as a souring market mood dampens the risky ‘Aussie’ Dollar’s appeal. Markets remain deeply concerned about the contagion risks from China’s property sector, which is teetering on the brink of collapse. Investors are worried that the developing crisis could spill out into the global economy.
Pound (GBP) Regains Ground despite UK Concerns
Meanwhile, the Pound is managing to claw back last night’s losses, although recession fears and diminishing Bank of England (BoE) interest rate rise bets seem to be putting a ceiling on Sterling.
GBP exchange rates have been on the back foot since last week’s BoE decision and a worryingly weak UK services PMI. Since then, new economic forecasts have added to the country’s bleak economic outlook.
This morning has brought some positive news, however. Since the BoE voted to pause its policy tightening cycle, mortgage rates have started to fall. This seems to be raising hopes that the UK’s cost-of-living crisis could start to ease, lessening the burden on households and thereby helping the British economy to return to health.
GBP/AUD Exchange Rate Forecast: UK GDP to Spark Sterling Movement?
Looking ahead, Friday finally brings some UK economic data to drive GBP movement, with the finalised GDP growth rate for the second quarter due for publication.
Previous estimates have reported that the British economy expanded 0.2% in the three months from April to June, up from a 0.1% expansion in the previous quarter. While confirmation of this could provide the Pound with some support, it may not trigger much movement.
If the final figure deviates from earlier estimates, however, we could see more significant movement in Sterling. A below-forecast reading could see the Pound stumble, while a stronger reading would likely boost GBP.
Until then, risk appetite could drive the Pound ‘Aussie’ pair. If the market mood remains downbeat, GBP/AUD could gain further ground.