GBP/AUD Exchange Rate Subdued on BoE Bailey Comments
The Pound Australian Dollar (GBP/AUD) exchange rate is trading with modest losses this afternoon as GBP investors were unimpressed by comments from Bank of England (BoE) Governor Andrew Bailey.
At time of writing the GBP/AUD exchange rate is around $1.762, relatively unchanged from this morning’s opening rate.
Pound (GBP) Dips as Markets Unconvinced by Bailey Comments
The Pound (GBP) is sliding this afternoon following comments from the BoE’s Bailey.
Speaking at the European Central Bank’s (ECB) Annual Forum on Monetary Policy, Bailey warned of a shock to real incomes and that the BoE will need to act more forcefully to tame inflation.
Despite Bailey’s hawkish comments GBP investors seemed unimpressed, with many fearing the bank will continue to fall behind the curve as the US Federal Reserve accelerates the pace of its monetary tightening.
Bailey continued by suggesting the current weakness in Sterling is unsurprising and that its difficult to tell how much this is the fault of Brexit or Covid.
Meanwhile, growing social unrest is likely to continue to weigh on the Pound this week as Royal Mail workers could be the latest to join mass walkouts across the country. Following in the footsteps of railway workers and barristers, soaring inflation has left wages behind in a spiralling cost-of-living crisis. If postal workers vote to back the strike, the Pound could be under more pressure.
Australian Dollar (AUD) Set to Climb amid Strengthening Economy
The Australian Dollar (AUD) could see further gains as Australian retail sales rose by 0.9% to another record level of $34.23Bn for the month of May. Marking the fifth straight month of growth, Australia continues its recovery post-Covid restrictions.
The ‘Aussie’ could see renewed strength with positive news out of China. An expected expansion in the Chinese manufacturing sector could provide a much-needed boost to the world’s second largest economy and to the Australian dollar as a proxy currency to China. The forecasted expansion to the manufacturing sector in May will be the first since February, after China’s zero-Covid policies have curbed factories and industries across the country with strict restrictions.
However, capping any further gains could be the mounting fears of a global recession. As market sentiment continues to sour, the risk-sensitive Australian Dollar could see downward pressure with investors preferring safe-haven currencies.