The GBP/AUD exchange rate trended lower last week as the Pound failed to sustain the gains made on the back of the Bank of England’s (BoE) more upbeat economic forecasts.
What’s Been Happening: Pound Slips against Australian Dollar in spite of BoE Optimism
The Pound found itself on the back foot through much of last week, as talks of a London lockdown and Brexit concerns weighed on GBP exchange rates.
Sterling was given a chance to rally against AUD in the second half of the week as the BoE revised its 2020 growth forecast higher, but the UK currency was unable to sustain these gains after the UK Chancellor Rishi Sunak reaffirmed that there would be no extension to the government’s furlough scheme.
Meanwhile, the Australian Dollar experienced volatility last week, driven in part by concerns over the spike of coronavirus cases in the state of Victoria.
However this didn’t prevent the ‘Aussie’ from closing the week higher against the Pound as it was supported by a more optimistic Reserve Bank of Australia (RBA) and broad weakness in the US Dollar.
Three Things to Watch Out for This Week
1. UK GDP Estimate
Likely acting as the main catalyst of movement in the Pound this week will be the UK’s latest GDP estimate. With economists forecasting that the UK economy will have contracted a whopping 20% in the second quarter.
2. UK Employment Report
Also of note to GBP investors this week will be the UK’s latest employment report. Will a rise in unemployment and sharp drop in wage growth sap Sterling sentiment through the first half of the week?
3. Australian Jobs Figures
The main focus for AUD investors will be Australia’s employment report, which is likely to drive Australian Dollar losses as forecasts predict unemployment hitting a 22-year high.
GBP/AUD Exchange Rate Forecast
Looking ahead, it is likely we will see the GBP/AUD exchange rate continue to trend lower this week on the back of some disappointing GDP and employment data from the UK.