Pound Australian Dollar Exchange Rate News: GBP/AUD Retreats in Wake of Lacklustre UK GDP Figures

GBP/AUD Exchange Rate Slumps as UK First Quarter GDP Underwhelms

The Pound Australian Dollar (GBP/AUD) exchange rate initially made some strong gains last week, with the pairing buoyed by some upbeat UK borrowing figures and broad-based weakness in the ‘Aussie’.

However, these gains proved to be short lived in the face of the UK’s most impactful data release last week, which revealed economic growth slowed to just 0.1% in the first quarter.

This disappointing GDP reading sent the Pound (GBP) exchange rate spiralling lower at the end of last week’ session, closing at a one-month low against AUD.

Meanwhile had it not been for the UK’s abysmal growth figures, the Australian Dollar is likely to have been the loser of the pair last week as the ‘Aussie’ suffered on currency markets throughout much of the previous session in the face of a soaring US Dollar (USD).

Pound (GBP) Exchange Rate Muted Following Rudd’s Windrush Resignation

The Pound is off to a slow start again this week, with GBP investors remaining wary following the resignation of the Home Secretary, Amber Rudd.

Her departure is yet another headache for Theresa May and will do little to dispel concerns of an unstable government just days before the UK’s local elections.

On top of this, Rudd was a prominent Remainer and investors are likely to fear her resignation could disrupt the delicate balance within the cabinet, something which could result in the government pushing the PM to take a harder line on Brexit.

Australian Dollar (AUD) Exchange Rate Subdued in Run-Up to RBA Rate Decision

Meanwhile the Australia Dollar is also struggling at the start of this week’s session as markets brace for the Reserve Bank of Australia’s (RBA) rate decision tomorrow.

A majority of economists currently forecast the RBA is likely to leave interest rates on hold well into next year, meaning Tuesday’s meeting is unlikely to deliver any changes to its monetary policy or forward guidance.

Jo Masters, Senior Economist at ANZ said last week in the wake of Australia’s latest inflation reading:

‘The Q1 inflation data will support the case that monetary policy is set to be on hold for some time to come. We continue to see the cash rate steady at 1.5% until May 2019.’

GBP/AUD Exchange Rate Forecast: Can Robust PMI Figures Help Sterling Rally?

Looking ahead the GBP/AUD exchange rate could stumble again this week, with the release of the UK’s latest round of PMI data.

April’s PMI figures will provide investors with their first look at how the UK economy fared at the start of the second quarter.

Given the disappointing result of the UK’s first quarter GDP figures there is likely to be a lot of focus on the private sector’s growth in April, with the Pound (GBP) exchange rate likely to tumble if they fail to inspire confidence in investors.

Meanwhile looking past tomorrow’s RBA rate decision, the Australian Dollar (AUD) could stumble in the second half of this week’s session as economists forecast Australia’s latest trade balance will reveal the domestic trade surplus narrowed in March.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail