Pound Australian Dollar Exchange Rate News: GBP/AUD Surged on Souring Market Mood

February 24, 2023 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Surged on Souring Market Mood

Australian Dollar (AUD) Plunged on Waning Market Mood

The Australian Dollar (AUD) came under heavy selling pressure on Friday in the wake of a myriad of headwinds. Both geopolitical and economic fears heightened, dragging the risk-sensitive ‘Aussie’ with it.

With the latest core PCE inflation reading in the US bolstering further rate hike bets, as increased interest rate pressures will only push up global borrowing costs and could effectively slow the world economy.

Elsewhere, as the one-year anniversary of the Ukraine invasion was met, hopes of peace are as far away as ever. Geopolitical tensions were mounting as US-Sino relations sour as China is expected to provide lethal aid to Russia. Also, fears of Russia launching a large-scale offensive could also be sapping demand.

Pound (GBP) Supported by Renewed Rate Hike Expectations

Meanwhile, the Pound (GBP) found relative strength against the weaker Australian Dollar on Friday despite a myriad of headwinds hammering the UK. An unexpected improvement in consumer sentiment did little to inspire investors on Friday morning, as the level remains downbeat amid the cost-of-living crisis and further domestic woes.

With fresh food shortages across UK supermarkets worsening, food inflation continues to weigh heavily on consumers. Numerous charities and thinktanks are concerned that millions of low-income households will be bearing the brunt of soaring food costs. With staple food item costs increasing relentlessly, the cost-of-living crisis continues to weigh heavy. Environment Secretary Thérèse Coffey has warned that the shortage could continue for another month. Coffey added:

‘I’m led to believe by my officials, after discussion with industry and retailers, we anticipate this situation will last about another two to four weeks.

‘It’s important that we try and make sure we get different sourcing options, and that’s why the (environment) department has already been in discussion with retailers, and why there will be further discussions led by ministers as well.’

However, elevated interest rate hike bets could be providing the Pound with some modest strength. Better-than-expected PMIs and hawkish speeches from Bank of England (BoE) members could be keeping GBP investors buoyed.

GBP/AUD Exchange Rate Forecast: Dovish BoE Speech to Spoil Sterling Party?

Looking ahead, the Pound Australian Dollar exchange rate could see a reversal of movement as a speech from a notoriously dovish Monetary Policy Committee (MPC) could sour moods. BoE member Silvana Tenreyro is scheduled to speak late on Friday. However, being a strong advocate of smaller hikes, even opting for pauses, a maintained dovish tone could drag Sterling lower once again.

Meanwhile, global market sentiment will continue to drive the ‘Aussie’ heading into the weekend. Further headlines from the Ukraine conflict, as well as the ongoing US-Sino relation saga, could dampen moods further.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Australian Dollar Forecasts