Pound Australian Dollar Exchange Rate News: GBP/AUD Recovers Modest Gains amid Positive GDP Data

April 1, 2022 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Recovers Modest Gains amid Positive GDP Data

Pound (GBP) Strengthens as Positive GDP Data Provides Welcome Boost

The Pound is enjoying moderate tailwinds as the British economy beat out expectations and expanded at a faster-than-expected pace the end of 2021, with the economy just 0.1% below its pre-pandemic levels.

The Office for National Statistics (ONS) published the data this morning showing the economy grew 1.3% QoQ at the end of 2021. Annual figures showed GDP rose by 6.6% in Q4, beating out both previous figures and an expected 6.5%. Further The economy expanded by 7.5%, the biggest increase since 1941.

Capping further gains could be the return of pessimism around the Ukraine-Russia conflict as positive peace talk sentiment did not last long. Reports of increased shelling continued Wednesday, less than a day after negotiators sought to find a diplomatic end to the conflict, with Russian promises of scaling back military action.

Despite the upbeat market mood in the wake of positive GDP data, the ongoing cost-of-living squeeze is still on the horizon, threatening to overshadow and subdue the Pound going forward.

Australian Dollar (AUD) Provides Further Upside to Pound with Weak China Data

The Australian Dollar (AUD) is trending down against the Pound (GBP) after the China Federation of Logistics and Purchasing (CFLP) reported poor monthly manufacturing PMI data for the month of February. Printing below the estimated 49.9 and previous 50.2, the PMI came in at 49.5.

With Australia a leading exporter to China, any losses reported in economic data could impact the Aussie. With manufacturing providing the backbone to Chinese economy, its influence on the global economy is huge.

A slump in oil prices is also exposing the Aussie to potential downside. WTI crude prices fell over 4%, and with reports of US President Joe Biden weighing up a huge oil release, up to 180 million barrels, to combat inflation. Such a move could influence the commodity-linked Australian Dollar.

Positivity around the Ukraine-Russia conflict has waned since Tuesday’s peace talks, with Australian Prime Minister Scott Morrison reacting to the aggression shown, publicly condemning Putin and imposing new sanctions against Russia over the conflict:

“We continue to work with partners to impose the maximum costs on Russia, through targeted sanctions on individuals and entities, the prohibition of energy, oil and gas products from Russia, and a ban on exports of alumina and aluminium ores (including bauxite) to Russia.

A prohibition on imports of oil and other energy products will also commence on 25 April.”

The worsening Ukraine crisis continues to influence the global energy market, with the commodity-linked Australian Dollar particularly susceptible to new developments, with the Pound more favourable if peaceful resolutions can be found.

GBP/AUD Exchange Rate Forecast: Could Waning Positivity in Ukraine Cap Pound’s Tailwinds?

Looking ahead, the Pound Australian Dollar (GBP/AUD) exchange rate could fluctuate further with darkening situation of Ukraine coming after fresh hopes of peace were dashed.

Ukrainian president Volodymyr Zelenskyy addressed the world from Kyiv last night, playing down hopes of a peaceful end to the conflict, noting a build-up of Russian troops preparing for a fresh offensive.

The final reading of March’s S&P manufacturing PMI could drag on the Pound on Friday if of the index prints at 55.5, e a drop from 58 in February. With the Ukraine war raging on unabated after so-called peace talks, supply shortages and inflationary pressure continue to weigh heavily on the manufacturing sector.

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