GBP/AUD Exchange Rate Falls Despite Growing Concerns Over US-China Trade Relations
The Pound to Australian Dollar (GBP/AUD) exchange rate fell by -0.3% today, with the pairing currently fluctuating around AU$1.82.
The Australian Dollar (AUD) edged higher today following the release of the Australian Westpac leading index for July, which rose by 0.05%.
Meanwhile, the ‘Aussie’ has benefited less dovish Reserve Bank of Australia (RBA) than was expected. As a result, the Australian Dollar (AUD) has benefited from growing hopes for Australia’s economy in the months ahead.
The RBA’ minutes showed:
‘Members reaffirmed that there was no need to adjust the package of measures in Australia in the current environment.’
‘Members agreed, however, to continue to assess the evolving situation in Australia and did not rule out adjusting the current package if circumstances warranted.’
However, the ‘Aussie’s gains could be short-lived, with growing expectations that the US Federal Reserve could become more dovish. As a result, we could see the Australian Dollar (AUD) suffer from concerns over the health of the global economy.
Pound (GBP) Sinks as Concerns Remain Over UK Economy Despite Rising Inflation
The Pound (GBP) fell following today’s release of the UK CPI figure for July, which rose from 0.6% to 1%. However, as this was below the Bank of England’s (BoE) target of 0.2%, concerns remain for Britain’s economy.
Jai Malhi, Global Market Strategist at J.P. Morgan Asset Management (JPMAM), commented on the report:
‘The upside inflation surprise highlights to us that Covid-19 was a shock to supply as well as demand. Companies having to operate at lower capacity may have to raise prices to cover sunk costs. At this stage we doubt this will prevent the Bank of England providing further support to the economy. But if these upside surprises continue it may add some hesitancy.’
Sterling has also failed to benefit from Downing Street’s reiteration of its hopes to secure a UK-EU post-Brexit trade deal. However, many Sterling traders are remaining cautious as talks between the two powers enter their seventh stage.
Michel Barnier, the EU’s Chief Negotiator, added that the EU would require ‘robust’ guarantees if the they are to agree with a post-Brexit trade deal.
GBP/AUD Forecast: Could Improving UK Consumer Confidence Boost Sterling Tomorrow?
Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of the Australian Commonwealth Bank’s manufacturing PMI for August. Any improvement would prove AUD-positive.
Tomorrow will also see the release of the Commonwealth Bank’s services PMI. If this continues to climb this month, then we could see the AUD/GBP exchange rate rise.
Sterling traders will be looking ahead to tomorrow’s release of August’s UK GfK consumer confidence. Any improvement would be GBP-positive.
The GBP/AUD exchange rate could rise this week, however, if Downing Street continues to maintain its positive outlook for a post-Brexit trade deal.
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