The Pound-Australian Dollar exchange range weakened on Tuesday, losing grounds as UK economy worries continue to dent the GBP. While writing these lines, GBP/AUD traded at1.6868, dropping from the 1.7018 overnight high.
AUD Exchange Rates Steady on China PMI
The Australian Dollar strengthened within the past 24 hours after better-than-anticipated China data. Remember, AUD gauges Chinese economic status. China’s recent NBS PMI figures outshined predictions.
For instance, the manufacturing score increased to 49.4 from 49, beyond the 49.2 estimates. Meantime, the service sector declined to 52.6 from 53.8, better than the 52 estimates.
Though downbeat, the PMI numbers were more steady than expected, giving the China-proxy AUD a lift. Nevertheless, AUD started paring its gains against GBP as the European session began today (despite the Sterling’s weakness).
The Australian Dollar seemingly succumbed due to its risk-sensitive status with a pessimistic market mood. Recessions worries weighted the markets heavily, with market players concerned about the Eurozone energy crisis, soaring inflation, and current Fed rate hikes.
Moreover, declining commodity prices likely impacted the resource-associated Aussie. Coal, gold, and Iron ore – Australia’s most crucial exports – maintained declines on Wednesday.
While publishing this post, iron dropped 3.79%, gold by -0.69%, and coal lost 1.94%. Meanwhile, these factors reduce the Australian Dollar’s gains against the Sterling.
GBP Exchange Rates Muted amidst Economic Worries
Meantime, the Pound encountered obstacles, having it suppressed while capping recoveries against AUD. Lloyds Bank revealed its recent Business Barometer on Wednesday.
It indicated declined confidence among the United Kingdom businesses, hitting the lowest mark since March last year. Confidence slumped from July’s 25% to August’s 16%.
UK food inflation explored the highest mark since the 2008 financial crisis in August, at 5.1%. The ugly United Kingdom economy has pressured the Sterling lately. That restricted GBP-AUD’s Wednesday recovery.
GBP-AUD Exchange Rate Prediction: UK Distress Pressuring GBP?
UK’s data releases remain short this week. Thus, domestic news might keep driving most of the Pound’s movements. Sterling might keep struggling if the United Kingdom maintains a downbeat economic outlook.
Moreover, UK’s social and political instability might extend GBP’s hurdles. Workers keep striking, demanding higher wages amid decade-high inflation numbers. Also, the nation continues to context for the new Prime Minister. These concerns might keep weighing on Sterling.