On Monday, the Pound to Australian Dollar (GBP/AUD) exchange rate increased as both currencies benefited from a positive market climate.
The Pound (GBP) gained ground on Monday as optimistic trades offset the fact that there were few significant macroeconomic data releases, which caused market attention to move to domestic stories.
The accounting and business advising firm BDO just released their most recent report on business trends, and they discovered that all four of their tracked indices had declined simultaneously. Hiring freezes and persistent economic headwinds were said to have hurt each of these indexes—output, optimism, employment, and inflation.
As a result, the optimism that the Pound experienced at the conclusion of last week after learning that the UK economy had escaped a recession seems to have subsided.
The Office for National Statistics also disclosed its most recent information on internet job postings. They emphasized the rising number of healthcare job openings, which has been identified as a strain on the UK economy.
The ONS reported that, despite higher relative demand at the height of the coronavirus epidemic, their percentage of online job postings has been steadily rising since 2017.
However, a bullish market environment allowed the more risk-averse Pound to be protected from these challenges.
The strength of the Australian dollar (AUD)
On Monday, the Australian Dollar (AUD) appreciated amid a bullish market atmosphere.
These concerns, nevertheless, didn’t appear to have much of an effect on the market’s attitude, which encouraged the risk-averse “Aussie” to make progress.
Westpac is scheduled to release its most recent consumer confidence index for February overnight, which will have an impact on the Australian Dollar (AUD) in the near future. The index is expected to rise, which might cheer up AUD investors and strengthen the “Aussie.”
These gains, however, can be tempered if the index presents a dismal image or depicts a gloomy consumer outlook.
The National Australia Bank’s most recent business confidence index is then scheduled to be released shortly after. It is anticipated that the index would increase from -1 to 1 in January, signaling a return to optimism. The Australian Dollar may advance further if this materializes as predicted since the economy is seeing a rebound in corporate confidence.
The unemployment and pay growth numbers for December will be made public on Tuesday for the British pound (GBP). The UK’s unemployment rate is anticipated to stay at 3.7%, which might strengthen the pound by demonstrating a competitive labor market. If so, the Bank of England (BoE) will have more room to tighten, which might lead to investors in GBP betting more on rate hikes and giving the pound a boost.
If this comes in as expected, it might put a stop to any positive trends by showing how severely inflation is impacting UK individuals and companies, which would dampen spirits.
Risk tolerance may also influence the matching in the near term in other contexts. A change to risk-on trading may benefit AUD over GBP since the “Aussie” is a more risk-sensitive asset than the Pound.