June 27, 2022 - Written by John Cameron
STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Fluctuates amid Recession Fears and UK Political Volatility
Pound (GBP) Wavers amid Social and Political Unrest
The Pound (GBP) is trading in a narrow range against most of its peers today as the ongoing political and social unrest in the country is weighing heavily on Sterling.
Adding to the social unrest caused by the escalating cost-of-living crisis, barristers are walking out and striking across the UK due to pay and working condition disputes. Following on from the UK’s largest railway strike in 30 years, the latest strikes could impact more than 1000 court cases a day.
With continuing civil unrest throughout the country, and many more on the way, businesses will continue to be impacted, weighing heavily on the Pound.
Meanwhile, Brexit issues continue to persist as the Pound remains under pressure. Later today, parliament will be meeting to vote on the proposed legislation that would give the ministers the power to unilaterally scrap the Northern Ireland protocol. With the EU previously warning of taking action against the UK if it proceeds with changing the agreement, claiming a breach of international law.
Ahead of the vote today, Secretary of State, Liz Truss is confident that the proposed change will benefit both sides:
‘This legislation will fix the problems the protocol has created, ensuring that goods can flow freely within the UK, while avoiding a hard border and safeguarding the EU single market.
‘A negotiated solution has been and remains our preference, but the EU continues to rule out changing the protocol itself - even though it is patently causing serious problems in Northern Ireland - which therefore means we are obliged to act.’
With the EU unwilling to negotiate the protocol itself, and the UK reluctant to negotiate other areas, the impasse is likely to continue, which is likely to result in a trade war.
Australian Dollar (AUD) Softens amid Looming Economic Challenges
The Australian Dollar (AUD) is under pressure today as fears continue to grow of the global economy facing ‘stagflation’, an unwelcome mix of low growth and high inflation. Over the weekend, Finance Minister Katy Gallagher warned of the economic challenges ahead for Australia as recession concerns mount:
‘The case for stagflation was a worst-case scenario, but where was no doubt the Australian economy faced challenges.
‘We have got cost of living going through the roof, we have got rising interest rates, we have got wages still stagnant and that is presenting some real challenges to people.
‘The job for government is to look at how we can make our policies, our sensible investments drive the productive capacity of the economy.’
Providing some moderate relief for the Australian Dollar was Reserve Bank of Australia (RBA) Governor Philip Lowe reassuring investors that he doesn’t expect a recession but there is a narrow path to bring inflation back down.
With ongoing pessimism in the market, the Aussie could be left to slide further if fears of a recession continue to grow.
GBP/AUD Exchange Rate Forecast: Hawkish BoE to Boost the Pound?
Data remains thin on the ground for the rest of the day and through the first half of the week. Speeches from the BoE tomorrow and Wednesday could influence the Pound Australian Dollar pairing if the central bank continues its hawkish rhetoric.
Elsewhere, Australia will see preliminary retail sales released on Wednesday, an expected slowdown in growth is likely to add pressure on the Aussie.
International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Pound Australian Dollar Forecasts