Pound Australian Dollar Exchange Rate News: GBP/AUD Wavered as UK Recession Fears Weighed Heavy

December 19, 2022 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Wavered as UK Recession Fears Weighed Heavy

Pound (GBP) Under Pressure from Relentless Domestic Headwinds

The Pound (GBP) struggled for much demand on Monday in the face of a quiet data calendar. Numerous economic challenges look set to keep a firm lid on Sterling gains as the cost-of-living crisis and industrial action weigh heavy.

Retail analysts are warning of a subdued end to the Christmas shopping period as strikes, cold weather, and living cost squeezes all dampen the festive mood. Data analyst firm Springboard predict that footfall was expected to climb after a quiet November, but the reality has hit differently.

Retailers have since reported far lower sales than expected. The Office for National Statistics (ONS) revealed that retail sales fell by 0.4% in November, compared to an expected 0.3% rise. Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), said:

‘Despite facing huge cost pressures, retailers are doing all they can to keep prices affordable for all their customers. But the cost-of-living crisis means many families might dial back their festive plans.’

Meanwhile, further calls for wealth tax are growing as it is revealed that the number of UK billionaires have increased by 20% since the pandemic. The Equality Trust has released a report calling for progressive wealth tax to tackle the ever-rising inequality in the UK. Interventions from the government and banks during the pandemic allowed an ‘explosion’ of billionaire wealth, at the expense of society. Jo Wittams, Co-Executive Director of the Equality Trust, said:

‘While Covid-19 saw billionaire wealth rise to levels never seen before, the construction of the economic infrastructure that has enabled this mass accumulation stretches back over the last four decades.’

Australian Dollar (AUD) Undermined by Cautious Market Mood

Meanwhile, the Australian Dollar (AUD) failed to capitalise on Sterling’s relative weakness as a downbeat market mood weighed on the risk-sensitive ‘Aussie’. A lack of major economic data left the Australian Dollar exposed to
Coronavirus outbreaks once again soured market mood amid mounting concerns of a return to restrictions. China announced the first Covid-related death since the government began relaxing its strict Covid measures. However, reports are also circulating that the official Covid death number is in doubt. Yanzhong Huang, a specialist on global health at the Council on Foreign Relations (CFR), casts uncertainty over the real number of deaths:

‘The (official) number is clearly an undercount of COVID deaths, may reflect the lack of state ability to effectively track and monitor the disease situation on the ground after the collapse of the mass PCR testing regime, but it may also be driven by efforts to avoid mass panic over the surge of COVID deaths.’

GBP/AUD Exchange Rate Forecast: RBA Meeting Minutes to Boost the Aussie?

Looking ahead, the Pound Australian Dollar exchange rate could see mild movement from the release of the Reserve Bank of Australia (RBA) meeting minutes from the last policy meeting. Any further indicators for monetary policy going forward could impact the Australian Dollar.

Meanwhile, a quiet week of trading for the Pound could see it exposed to the relentless domestic headwinds. Further strike action and cost-of-living squeezes could dent Sterling.

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