The Pound to Australian Dollar exchange rate was 0.40% higher on Thursday as sterling tries to hold that key level which was reached in January of 2021. The Australian dollar suffered from a lower-than-expected trade balance. Business groups in the UK have called for an energy price cap to protect investment in the country.
The GBP to AUD was trading at 1.7460 after seeing new yearly lows on the week.
Australian trade balance suffers with geopolitical scene
The Australian trade balance came in much lower than expected at A$7.45BN. Analysts at Westpac were expecting a A$13.2bn trade surplus, very close to the A$13.3bn peaks seen last July.
The analysts had forecast exports to push higher still in February, +2.2%, up $1.1bn. They noted that coal and LNG had likely advanced, with higher prices and volumes.
“’Iron ore is expected to ease a little despite higher prices, with shipments soft in the month. Imports dipped in January, -1.6%, after a 13% jump over the previous two months associated with the post delta reopening. For February, a resumption of the uptrend is expected, +2.2%, +$0.8bn, on higher volumes and rising prices,” Westpac had said.
UAP party Chairman, and former minerals magnate Clive Palmer, warned that Australia faces ‘economic war’ with Asia. Mr Palmer said Asian countries are desperate for Australian ore.
“They rejoice, in the fact we have weak public servants who lack leadership,” he said.
“They laugh about them over drinks. And we can’t let them laugh any longer. We’ve got to stand up and claim our rightful place in this country. Because we’re in a critical situation.”
The Australian dollar is being supported by safe haven flows, where higher commodities, and its long distance from the European tensions are benefits.
Business groups call for a cap on energy price hikes
Business groups called upon Chancellor to urgently introduce an energy price cap to help stop a slowdown in economic growth as they warned the current tax hikes will mean companies stop “investing in the future.”
The rise this week in National Insurance threatens to hit economic growth as businesses are forced to slow recruitment and reduce production levels. Director-General for the British Chambers of Commerce, Shevaun Haviland said Rishi Sunak had to make urgent changes to support businesses and ensure they are able to continue to operate. Without essential government support, Ms Haviland claims businesses “will have to stop recruiting, they will have to pull back on production and they will stop investing in the future.”
LBC highlighted that the rise in national insurance comes at a time when the tax burden in the UK is at its highest point in 70 years. The tax hike has been introduced by “a Conservative Government that went into the last election pledging not to raise national insurance, not to raise income tax or VAT,” they added.
The economic calendar was quiet for the UK economy into the end of the week but next week sees the latest employment figures and the all-important inflation rate. A Bank of England policy meeting will follow those indicators.