Pound Australian Dollar (GBP/AUD) Exchange Rate Slides as Sino-Australia Relations Improve
The Pound Australian Dollar (GBP/AUD) exchange rate is tanking this morning, as AUD benefits from thawing Chinese trade relations.
At the time of writing, GBP/AUD is trading at around AU$1.8879, falling by around 0.6% from the morning’s opening rates.
Australian Dollar (AUD) Climbs amid Improving Sino-Australian Trade Relations
The Australian Dollar (AUD) is soaring this morning, as Sino-Australian trade relations continue to thaw.
Yesterday, the Australian government announced that China was removing barriers to imports of Australian hay. Suppliers of hay are now registered to sell in China, the latest step in continued improvements.
Australian Trade Minister Don Farrell commented that:
‘This is another positive step forward, but there is more work to do. I will continue to persevere and press for all outstanding impediments to be removed as soon as possible.’
This positive momentum is being carried forward today, with the cheery market mood bringing further strength to AUD.
Elsewhere, interest rate hike bets could be an additional factor in the ‘Aussie’s strength this morning. Recently, inflation was found to have increased, which could suggest a surprise hike is on the cards from the Reserve Bank of Australia (RBA).
Pound (GBP) Underpinned by Upward GDP Revision
The Pound (GBP) is seeing modest support this morning, following an upward revision to Q2’s GDP data.
While the quarter-on-quarter release remained the same, the yearly data was revised to show 0.6% growth over 2022. With a display of life in the UK economy, analysts are moving to cushion Sterling against safer assets.
However, the picture isn’t firmly rosy. Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown, highlighted that:
‘While momentum is overall positive, these levels of growth aren’t exactly shooting the lights out. Higher interest rates are playing their part in turning the nation’s economic thermostat down and this will play a key role in upcoming interest rate decisions.’
Elsewhere, the bullish market mood is likely providing additional support for GBP. As an increasingly risk-sensitive currency, Sterling is sensitive to these shifts in risk appetite.
Pound Australian Dollar Exchange Rate Forecast: RBA Decision in Spotlight
Looking ahead for the Australian Dollar, the main event is on Tuesday. Then, the Reserve Bank of Australia posts its latest interest rate decision.
Economists anticipate another hold from the RBA, with it likely to keep interest rates at 4.1%. A hawkish hold could bring strength to the ‘Aussie’, if the bank leaves the door open to further tightening.
For the Pound, the short supply of data continues into early next week. The final reading of September’s manufacturing PMI is due to print on Monday.
If it shows a significant deviation, Sterling may trade in tandem. Ultimately, GBP is likely to be left vulnerable to shifts in the market mood. Bullish trade could buoy the increasingly risk-sensitive currency.
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