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Pound Australian Dollar Exchange Rate Soars as UK Economy Rebounds in March

May 12, 2021 - Written by John Cameron

GBP/AUD Exchange Rate Edges Higher as UK Economic Confidence Continues to Grow

The Pound Australian Dollar (GBP/AUD) exchange rate rose by 1% today after the UK rebounded in March thanks to the nation’s effective rollout of Covid-19 vaccines. The pairing is currently trading around AU$1.82.

Sterling continued to rise against the Australian Dollar today as the outlook for the UK economy continues to improve.

Chancellor Rishi Sunak was also upbeat about the data, saying:

‘Despite a difficult start to this year, economic growth in March is a promising sign of things to come. As we cautiously reopen the economy, I will continue to take all the steps necessary to support our recovery.’

Added to this, the UK is now due to further ease lockdown measures on 17 May, with Prime Minister Boris Johnson saying that work-from-home guidance would also be lifted on 21 June.

Now that the UK economy appears more and more set for recovery, with the Government’s roadmap for easing lockdowns on track, Pound investors are becoming more confident about the months ahead.

Australian Dollar (AUD) Exchange Rate Sinks as Risk Sentiment Sours

The Australian Dollar (AUD) suffered today because of souring risk-sentiment and growing concerns about rising levels of inflation in the United States.

Analysts at Reuters explain:

‘Asian risk assets look set for initial markdowns following overnight technology-led losses on Wall Street amid fears of a lasting upturn in US inflation.

‘The Fed has consistently predicted only a transient rise in inflation as the economy rebounds, but the Treasury market is not convinced.’

As a result, global risk sentiment has soured because of growing uncertainty around the world’s largest economy.

In absence of any notable Australian economic data today, the AUD/GBP exchange rate has been largely rudderless, with souring risk sentiment further limiting the appeal of the risk-sensitive ‘Aussie’.

Pound Australian Dollar (GBP/AUD) Exchange Rate Forecast: Could a Hawkish BoE Further Boost the Pound?

The Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of the latest Australian Consumer Inflation Expectations data for May.

Any improvement in the outlook for the Australian economy would help the ‘Aussie’ claw back some of its losses.

Pound (GBP) investors will be awaiting tomorrow’s speech from the Bank of England’s (BoE) Governor Andrew Bailey.

If Bailey reiterates confidence in the UK economy, then the Pound Australian Dollar exchange rate would head higher.

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