The Pound recorded modest gains against the Australian Dollar following a televised questioning of Theresa May and Jeremy Corbyn.
At the close of last week the Pound tumbled on the news that the Conservative lead against Labour in the election polls had narrowed dramatically.
However, GBP/AUD has managed to claw back some of its losses in the wake of the leaders of the Labour and Conservative parties being quizzed on television.
Both leaders faced tough questioning from the studio audience and host Jeremy Paxman, but neither May nor Corbyn was said to have emerged from the event triumphant.
As Corbyn didn’t particularly distinguish himself over May, the event is unlikely to have further narrowed the gap between Labour and the Conservatives in the polls.
Hopes that the Conservative party may still emerge from the election with a greater majority gave the Pound a little boost.
Australian Dollar Flops as Iron Ore Prices Disappoint Traders
The Australian Dollar’s decline against the Pound was also the result of disappointing moves in the commodity market.
The cost of iron ore, a nationally important mining resource, has been trending under $62 per tonne for the last week, which has lowered confidence about its future value.
The weakness in iron ore comes despite a forecast from Treasury Secretary John Fraser that Australian economic growth will pick up in the near-term.
GBP/AUD Forecast
This week, Pound/Australian Dollar exchange rate movement may occur as a result of the UK GfK consumer confidence and UK manufacturing/construction PMIs (due out on Wednesday, Thursday and Friday respectively).
Consumer confidence is forecast to worsen in May with a dip from -7 to -8 points. If sentiment does indeed decline the report could have a slight negative influence on the Pound.
The later PMI results, measuring activity in the areas of manufacturing and construction, have also been predicted pessimistically. Activity in the construction and manufacturing sectors is forecast to slow, but not so much that it enters the contraction range.
The construction figure could nonetheless weaken the Pound if it falls from 53.1 to 52.7 as forecast. 50 points is the divider between growth and contraction.
Australian economic data out this week includes a private sector credit measure on Wednesday. Further ahead, measures of manufacturing activity, retail sales and new home sales are set for release on Thursday and Friday.
The private sector credit score is indicative of the economic wellbeing of the private sector; a monthly and yearly rise could boost Australian Dollar demand on Wednesday.
Thursday’s data will include the AiG manufacturing index for May, along with April’s retail sales result. Further AUD gains could come from the sales data, as a rise in consumer spending from -0.1% to 0.3% is forecast.