The Pound-Australian Dollar rate could remain supported if risk appetite stays weak, with the Aussie vulnerable to further geopolitical and bond-market pressure.
The Pound Australian Dollar (GBP/AUD) exchange rate firmed on Thursday as a souring mood weighed on the risk-sensitive ‘Aussie’.
At the time of writing, GBP/AUD was trading at AU$1.9006, up around 0.2% from its earlier low point.
Pound to Dollar (GBP/USD): 1.32039 (-0.22%)
Australian Dollar to Dollar (AUD/USD): 0.695737 (-0.38%)
DAILY RECAP:
The risk-sensitive Australian Dollar (AUD) weakened on Thursday as a souring market mood weighed on the currency.
Sentiment deteriorated amid a fresh rise in oil prices following recent attacks on oil tankers in the Strait of Hormuz. In addition, energy companies in the US have shut down some offshore oil and gas platforms in the Gulf of Mexico due to risks posed by an approaching hurricane.
Furthermore, the prospect of higher interest rates globally and reports that some large tech companies are trying to raise billions of Dollars in debt spooked investors.
As a result, the risk-sensitive ‘Aussie’ struggled to attract support.
Meanwhile, the Pound (GBP) lacked a clear direction on Thursday as British economic data remained thin on the ground.
Sterling also fluctuated as UK gilt yields hit multi-year highs before retreating from their peaks. The initial rise unnerved GBP investors, with rising government borrowing costs creating a challenge for the Treasury ahead of the Autumn Budget.
However, the pullback eased these concerns a little and helped the Pound recoup early losses.
Near-Term GBP/AUD Forecast: Risk Appetite and RBA Outlook in Focus
Looking ahead, movement in the Pound to Australian Dollar exchange rate may continue to be driven primarily by wider market sentiment and expectations surrounding Reserve Bank of Australia policy.
The Australian Dollar remains particularly sensitive to shifts in risk appetite, with global bond markets, oil prices and developments in the Middle East all capable of driving volatility.
A further deterioration in risk conditions could weigh on the risk-sensitive ‘Aussie’ and push GBP/AUD higher.
However, the Australian Dollar may find some support if investors become more confident that the RBA will need to raise interest rates again before the end of the year.
The RBA has already lifted rates to 4.6%, and persistent inflation pressures mean another increase remains possible.
China will also remain an important influence given Australia’s close trade links, with upcoming Chinese economic data likely to affect sentiment towards the Australian Dollar.
For the Pound, the UK calendar is relatively light in the immediate term, potentially leaving Sterling particularly sensitive to movements in global markets and expectations surrounding the Bank of England.
Our currency coverage draws on live market data, official economic releases and published bank research.
