Pound Australian Dollar (GBP/AUD) Exchange Rate Rangebound amid Data Lull
The Pound Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range this morning amid a lack of notable economic data.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9123, virtually unchanged from this morning’s opening rate.
Pound (GBP) Quiet amid Absence of Data
The Pound (GBP) is moving without a clear direction today amid a lack of data.
While yesterday’s the higher-than-forecast PMIs saw GBP rally amid signs of economic expansion, Sterling’s wins appear to have levelled off this morning ahead of further key releases.
In the meantime, Sterling is left vulnerable to the UK’s economic outlook. Analysts and economists alike speculate that cost of living concerns may continue to stifle consumer spending throughout the ‘Golden Quarter’.
Victoria Scholar, Head of Investment at Interactive Investor, argues that the usually lucrative Black Friday sales are unlikely to offer their usual boost to the UK economy this year:
‘This year, the timing of Black Friday doesn’t bode well for the retailers given that it falls ahead of payday when workers’ purse strings are typically much tighter. Given that retailers have been heavily discounting items already this year to try to bolster spending in response to sluggish demand, consumers are suffering from ‘discount fatigue’ by this point in the year, to the detriment of Black Friday and Cyber Monday.’
While the latest UK retail data reported a significant decline, spending is expected to remain weak over the economically impactful Christmas period. While a study by Accenture reported that roughly 60% of people in the UK are planning to spend less over Christmas, declining customer spending is likely to weigh heavy on the UK’s struggling retail sector.
As UK economic gloom persists, the Pound may continue to trade sideways for the remainder of today’s session.
Australian Dollar (AUD) Subdued amid Shifting Risk Appetite
The Australian Dollar (AUD) is muted this morning, as Australian data is also thin on the ground.
Recent Australian economic indicators look to be keeping AUD afloat this morning in the absence of fresh data. While the Reserve Bank of Australia (RBA) recently delivered an interest rate hike, surrounding commentary from policymakers regarding monetary policy appears increasingly hawkish, supporting AUD in recent days.
RBA Governor Michele Bullock noted this week:
‘The remaining inflation challenge we are dealing with is increasingly homegrown and demand driven. A more substantial monetary policy tightening is the right response to inflation that results from aggregate demand exceeding the economy’s potential to meet that demand.’
A cautiously optimistic market mood also appears to be buoying the risk-sensitive ‘Aussie’. However, market uncertainty and shifts in in risk appetite may prevent AUD from gaining significant ground so far this morning.
Pound Australian Dollar Exchange Rate Forecast: Risk Appetite to Drive GBP/AUD Volatility?
In the absence of any high impact data in the coming days, the Pound Australian Dollar exchange rate may remain vulnerable to shifts in risk appetite. Amid surmounting global inflationary pressures and developing geopolitical matters, a spell of cautious trade may see the risk-sensitive ‘Aussie’ slump.
However, should risk appetite improve, then AUD could firm against its safer peers, putting pressure on the GBP/AUD exchange rate.
Due for release on Monday, the latest retail data from the Confederation of British Industry (CBI) may drive GBP movement. Should November’s CBI report follow recently bleak retail trends, the Pound may face headwinds amid signs of continual economic malaise. However, a forecast uptick may lend Sterling some support.