GBP/AUD Exchange Rate Strengthens UK Chancellor Seeks to Protect Jobs with New Stimulus Package

The GBP/AUD exchange rate trended higher over the past week, largely on the back of Chancellor Rishi Sunak’s new stimulus package.

What’s Been Happening: Pound Bolstered by £30bn Stimulus Announcement

The Pound opened last week on the back foot, stumbling out of the gate in spite of the UK recording its strongest construction PMI for two years.

However it didn’t take Sterling long to bounce back, with investors flocking to the UK currency in anticipation for Rishi Sunak’s mini-budget.

This ultimately saw GBP/AUD accelerate even further, as the Chancellor announced a new fiscal stimulus package worth £30bn.

But these gains would be tempered through the latter half of the week, as the latest round of Brexit talks concluded without a breakthrough being found.

The Australian Dollar, meanwhile, was met by volatility last week, initially climbing in response to a more optimistic market outlook.

These gains proved short lived however, with the ‘Aussie’ tumbling through the remainder of the week in light of the Reserve Bank of Australia’s (RBA) cautious tone following its latest policy decision, as well as the news that Melbourne would be going back into lockdown after a spike in coronavirus cases.

Three Things to Watch Out for This Week

1. UK Data

There will be plenty of UK economic data for GBP investors to mull over this week, with the latest GDP, inflation and unemployment figures all likely to infuse fresh volatility into the Pound throughout the session.

2. Brexit Developments

Also set to remain a key catalyst of movement in Sterling are the ongoing Brexit trade talks between the UK and EU. Expect to see more setbacks for the Pound if negotiations remain deadlocked this week.

3. Australian Jobs Report

The focus for AUD investors this week looks to be Australia’s latest jobs report. Will a spike in domestic unemployment last month drive the Australian Dollar lower towards the end of the session?

GBP/AUD Forecast

On top of the points listed above, the GBP/AUD exchange rate is also likely to remain highly sensitive to market sentiment, particularly regarding coronavirus headlines, with the pairing likely to strengthen if global cases continue to spike.

Matthew Andrews

Contact Matthew Andrews