The GBP/AUD exchange rate trended higher through last week’s session as gloomy forecasts from the Federal Reserve and fears of a coronavirus resurgence spooked markets.
What’s Been Happening: Australian Dollar Undermined by Souring Market Sentiment
The Australian Dollar was placed on the defensive through much of last week’s session as hopes for a swift recovery in the global economy began to fade.
This mostly came on the back of the Fed’s latest forecasts in which the US central bank warned there is still a long road to recovery for the US economy, which alongside fears of a second wave of infections soured the market mood.
Placing additional pressure on the ‘Aussie’ was also a rise in tensions between Australia and China, as Beijing sought to escalate their spat over a coronavirus inquiry by warning students and tourists against staying in Australia.
Meanwhile, the Pound’s gains against the Australian Dollar last week were tempered by Brexit worries and ongoing concerns that the UK is struggling to control over its coronavirus outbreak.
Further undermined Sterling’s advance was the publication of the UK’s latest GDP figures, as they revealed a startling 20.4% plunge in growth in April.
Three Things to Watch Out for This Week
- UK Data and BoE Rate Decision
GBP investors will be kept on their toes this week, with a slew of high impact UK data releases as well as the Bank of England’s (BoE) latest policy decision set to infuse the currency with fresh volatility.
- Second Wave Fears
Renewed fears over the coronavirus are likely to be a major catalyst of movement this week, with investors likely to shun risk-sensitive currencies like the Australian Dollar as a result.
- Australian Job Report
Also in focus for AUD investors this week will Australia’s latest jobs report. Will a sharp rise in unemployment dent the appeal of the ‘Aussie’?
GBP/AUD Forecast
The GBP/AUD exchange rate is likely to trade in a wide range this week as the threat of a coronavirus resurgence and a slew of data releases is set to keep traders on their toes.