Pound Australian Dollar Exchange Rate News: GBP/AUD Recovers from Post-BoE Lows

November 7, 2022 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Recovers from Post-BoE Lows

GBP/AUD Exchange Rate Soars as Investors Adjust for a Fresh Week

The Pound to Australian Dollar (GBP/AUD) exchange rate was strengthening on Monday as investors rushed to reinvest in the Pound (GBP).

At time of writing the GBP/AUD exchange rate traded at around $1.7703, up roughly 0.7% from Monday’s opening levels.

Pound (GBP) Recoups Losses amid Dip Buying

The Pound (GBP) was up against the majority of its peers on Monday as investors readjusted their expectations for the week.

The Pound was seemingly oversold during later trade last week following the announcement that the UK was in a recession. The news followed the Bank of England’s (BoE) 75bps hike on Thursday. The central bank also predicted that the economic downturn could last up to two years.

The bank said the economic outlook for the UK was going to be ‘very challenging’. This also compounded concerns about the cost-of-living crisis facing consumers as food and electricity costs will likely continue to climb this winter.

However, on Monday morning the Pound began to recover from last week’s lows as investors began to buy the dip as they focused on the week ahead.

Also underpinning Sterling was the upbeat mood among investors during the European session. This boost in mood was in part due to positive data from Germany, which helped ease recession fears within the Eurozone.

Australian Dollar (AUD) Weakened by Poor Chinese Data

The Australian Dollar (AUD) slipped on Monday morning as weak economic data from China dented the currency.

AUD acts as a proxy currency for China, meaning anything of significance happening in the country will likely impact the Australian Dollar. The forecast for China’s trade surplus in October was $95.95bn. However, figures showed that the surplus only rose to $85.15bn.

China’s cooling exports, which dropped by 0.3% year on year in October, are a result of a weakening of global demand as recession concerns weigh on markets. An unexpected drop in imports by 0.7% also demonstrated weak economic growth within China.

Raymond Yeung, Chief China Economist at ANZ said of the data:

‘The tepid outlook for global supply chains does not bode well for China’s exports.’

GBP/AUD Exchange Rate Forecast: AUD to Firm on Chinese Inflation Data?

Looking ahead, the Pound Australian Dollar could see fresh impetus from Australian and Chinese data.

Overnight on Monday we have Australia’s latest services index, consumer confidence and business confidence. All three data releases are forecast to show negative results, which could weigh on the ‘Aussie’.

China’s inflation data on Wednesday could also impact AUD. The inflation figures year on year for October are expected to fall from 2.8% to 2.4%. If this is true, then AUD could get a boost. If the data misses forecast though, the Australian Dollar could be dented.

Looking at the UK, the data calendar is sparse on Tuesday, but a speech from BoE policymaker Huw Pill could cause impetus for GBP. If Pill expresses further concern about the UK economy, or hints that rate hikes will slow in future meetings, Sterling could slip.

In the meantime, the Pound could continue to firm amid an upbeat European session. However, if domestic headlines print anything concerning the cost-of-living crisis, this could reignite concerns and see GBP shed some of Monday’s gains.

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