Pound Australian Dollar (GBP/AUD) Exchange Rate Declines on Hunt’s Economic Outlook
Article updated 16:03, 22/11/2023
The Pound Australian Dollar (GBP/AUD) exchange rate slipped further this afternoon following the release of UK Chancellor Jeremy Hunt’s hotly anticipated annual Autumn Statement.
Hunt’s statement appeared to underwhelm investors, despite inclusion of economic growth incentives and tax cuts. In addition to this, many businesses were disappointed by Hunt’s implementation of higher rates in larger hospitality and retail businesses.
Furthermore, the Office for Budget Responsibility provided a downwardly revised growth forecast for the UK economy, falling from 1.8% down to 1.6% following the release of the Autumn Statement.
Amid renewed signs of UK economic distress, Sterling looks to be retreating from this mornings hawkish wins, with concerns of continued economic slowing undermining the possibility of any looming BoE interest rate hikes.
Pound Australian Dollar (GBP/AUD) Exchange Rate Slips amid Risk-On Mood
The Pound Australian Dollar (GBP/AUD) exchange rate is softening this morning amid an upbeat market mood ahead of the UK Autumn Statement.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9083, down around 0.2% from this morning’s opening rate.
Pound (GBP) Volatile Ahead of Autumn Statement
The Pound (GBP) is mixed this morning amid a lack of fresh UK data.
In the wake of hawkish commentary from Bank of England (BoE) policymakers, Sterling initially edged higher, though gains were limited ahead of further impactful releases.
BoE Governor Andrew Bailey reiterated his ‘higher for longer’ stance regarding interest rates during a speech yesterday, commenting:
‘We are concerned about the potential persistence of inflation as we go through the remainder of the journey down to 2%.
I think the market is underestimating that.’
Amid signs that the BoE remains open to further tightening, Sterling firmed overnight. However, GBP investors are now holding steady ahead of key information due for release in this afternoon’s Autumn Statement.
Australian Dollar (AUD) Regains Ground as Mood Improves
The Australian Dollar (AUD) stumbled overnight as increasingly cautious trade permeated global markets. However, a recovering appetite for risk during today’s European session has helped the ‘Aussie’ recoup last night’s losses.
In addition, hawkish commentary from Reserve Bank of Australia (RBA) Governor Michele Bullock may be helping AUD. While discussing the future of monetary policy this morning, Bullock stated:
‘That is what the board is aiming to do with monetary policy – to slow the growth of demand enough to bring inflation back to target while keeping employment growing.
‘Everyone is seeing prices for goods and services rise strongly but this has a particularly severe impact on low-income households. This emphasises the need to get inflation back down.’
Bullock’s apparent commitment to bringing inflation down has lent AUD some support, helping the currency regain some of the ground lost overnight.
Pound Australian Dollar Exchange Rate Forecast: Autumn Statement in Focus
This afternoon the UK’s annual Autumn Statement is due for release. Analysts predict that within the statement, Chancellor Jeremy Hunt will announce tax and spending measures aiming to support UK economic growth. Amid an increasingly stagnant economy, proposed growth plans may see the Pound garner investor interest.
Looking to Australia, the Judo Bank preliminary PMIs are due out tonight. With both the services and manufacturing surveys forecast to come in below 50, contracting economic activity may undercut RBA rate hike bets, causing AUD to slump.
Similarly, the UK’s preliminary PMIs are due out on Thursday. Should November’s surveys print in line with forecasts, GBP could falter as economic trends continue to follow a downward trajectory. As an ongoing contraction in UK private sector activity fuels domestic recession fears, pared BoE rate hike bets may see GBP plummet.