Pound to Australian Dollar (GBP/AUD) Exchange Rate Dips despite Trading Near Best Weekly Levels

Minor Dip in GBP/AUD Exchange Rate Leaves Pound to Australian Dollar Exchange Rate Favourable

The Pound (GBP) has continued to post minor losses against the Australian Dollar (AUD) today, although the GBP/AUD exchange rate is still near its best level of the week.

Pound traders have been considering the chances of volatility being triggered by the upcoming speeches from Bank of England (BoE) officials.

Last week saw GBP turbulence when BoE Governor Mark Carney and fellow official Michael Saunders spoke.

BoE Deputy Governor Sam Woods will be speaking this afternoon, followed by Mr Carney and policymaker Andy Haldane on Friday; this opens the door to further GBP/AUD fluctuation.

Risk of UK GDP Slowdown Drags GBP/AUD Exchange Rate Down

The Pound (GBP) has made a small loss against the Australian Dollar (AUD) today, ahead of a potential data upset later in the week.

High-impact GDP growth rate figures for the first quarter of the year will be released on Friday and may trigger a significant GBP/AUD exchange rate fluctuation.

Cautious UK Growth Forecasts Leave Pound to Australian Dollar Exchange Rate Uninspiring

Another factor preventing a GBP/AUD exchange rate rally lately has been the issuing of a cautious economic forecast from the EY Item Club.

Although analysts at the company predict two UK interest rates in 2018 and two in 2019, they have also made predictions of tepid growth in 2018 and 2019.

Summing up the cautious outlook, EY Item Club’s Mark Gregory said:

‘The projected level of UK growth is low relative to both the UK’s historic performance and the rates of growth being achieved by the country’s international peers.’

Australian Dollar to Pound (AUD/GBP) Exchange Rate Rises on Inflation Pressure Forecast

On the other side of the pairing, the Australian Dollar (AUD) has made a minor advance against the Pound (GBP) thanks to the latest inflation rate figures for Q1 2018.

Year-on-year inflation has remained at 1.9% instead of slowing as some had forecast. While other economists had predicted a rise to 2%, this result has still raised AUD trader optimism.

The perception is that inflation pressures are slowly building, which could eventually force Reserve Bank of Australia (RBA) policymakers to raise Australian interest rates.

Pound to Australian Dollar Exchange Rate Forecast: Will GBP/AUD Advance on UK GDP Estimates?

There will be additional UK economic data to watch out for this week, which has a chance of influencing the Pound to Australian Dollar (GBP/AUD) exchange rate.

Most of the key releases will be confined to Friday, when confidence and GDP data will be released along with a pair of speeches from Bank of England (BoE) officials.

The opening GfK consumer confidence reading for April may cause initial Pound exchange rate losses, if it shows a forecast-matching print of -7 points.

The day’s later UK data, GDP estimates for Q1 2018, could have a greater positive effect if they end up exceeding forecasts.

Quarter-on-quarter GDP growth is tipped to decline slightly, but the year-on-year reading could rise from 1.4% to 1.5%.

If both GDP figures are estimated to have risen then the Pound could appreciate against the Australian Dollar and other peers.

Finishing off the week’s economic news will be speeches from Bank of England (BoE) Governor Mark Carney and fellow official Andy Haldane.

If both men hint at UK interest rate hikes in the coming months then the Pound could rally against the Australian Dollar.

There is no major Australian data out for the rest of the week, so AUD movement before the weekend could be determined by any Pound or US Dollar strengthening.

Adam Solomon

Adam joined the team at TorFX soon after graduating from University in 2005 with a degree in Journalism. Since then Adam has advanced to become both Head of Trading and Head of Treasury. His keen interest in the currency market and knowledge of what drives exchange rates makes him perfectly positioned to produce regular market updates focused on the movements of the major currencies.

Contact Adam Solomon