Pound Australian Dollar (GBP/AUD) Exchange Rate Rangebound after Johnson Vote
The Pound Australian Dollar (GBP/AUD) exchange rate is trading within a narrow range today. The currency pair fell drastically this morning following the Reserve Bank of Australia’s (RBA) decision to raise interest rates above expectation.
Additionally, uncertainty surrounding Boris Johnson’s premiership and poor performance for the UK retail sector may also be weighing on the pair. GBP/AUD pair has since recovered many of its losses amid a risk-off market mood, however.
At time of writing the GBP/AUD exchange rate is at around $1.7415, virtually unchanged from this morning’s opening figures.
Australian Dollar (AUD) Leaps Following 0.5% Rate Hike from RBA
The Australian Dollar (AUD) gained against its competitors today following the RBA’s decision to hike interest rates by 0.5%. The move represented the central bank’s single biggest rate hike in 22 years and prompted a leap in the ‘Aussie’.
Speaking on the RBA’s forward outlook, RBA Governor Philip Lowe said:
‘The Board expects to take further steps in the process of normalising monetary conditions over the months ahead.’
Investors are anticipating that the central bank will continue with a schedule of aggressive rate hikes throughout the year. These expectations may also be boosting the Australian Dollar.
Additionally, a sharp uptick to iron ore prices could be helping AUD to climb higher today. The commodity made its biggest weekly gain in 13 weeks amid renewed Chinese demand.
Pound (GBP) Slips amid Faltering Confidence in PM Johnson
The Pound is struggling against many of its rivals today. A retreat to global risk appetite has helped Sterling to make gains against its riskier competitors. Uncertainty surrounding Boris Johnson’s future is likely weighing on GBP however, as well as poor performance for the UK’s retail and services sectors.
Confidence in Boris Johnson remains low despite his victory in a vote of no confidence on Monday. The results of the vote indicated that the PM has lost the confidence of 41% of his MPs. The issue is likely to continue to keep pressure on the Pound in the coming weeks.
Poor retail sales figures for May could also be pulling Sterling lower today. Year-on-year figures collected indicated a fall of 1.1% as the country’s cost-of-living crisis continues to dampen household spending.
Rising inflation also saw a slowdown for the country’s services sector last month. Rising inflation has seen rising costs for companies. The figures were better than expected however, with strong hospitality spending helping to underpin the sector.