The Pound to Australian Dollar exchange rate remained largely flat at the start of the week after the delay to the US-China meeting to review the Phase 1 trade deal. This offered riskier assets relief and left GBP/AUD muted as the Phase 1 trade deal was left intact.
What’s Been Happening: Aussie Unemployment Jumps to 22-Year High
The Australian Dollar struggled against the Pound last week after data showed Australia’s unemployment rate jumped to a 22-year high and the second wave of the coronavirus crisis in Victoria marked an unwelcome setback for the country.
Sterling continued to make gains against AUD despite Britain suffering the largest fall in employment since the financial crisis. Data also revealed the UK suffered a record -20.4% contraction in Q2, making this the steepest decline of any major economy so far during the crisis.
The end of the week saw GBP/AUD exchange rates continue to rise as Britain relaxed its lockdown restrictions once again.
Three Things to Watch Out for This Week
- RBA Minutes
The ‘Aussie’ could suffer some losses this week following the release of the latest Reserve Bank of Australia (RBA) meeting minutes. If policymakers are overly dovish and worried about the economic outlook, it will weigh on AUD.
- UK Inflation
Sterling traders will be focused on the upcoming Consumer Price Index (CPI) which could see GBP make some gains. If July’s inflation shows further signs the economy is rebounding after the pandemic, it will boost the Pound exchange rates.
- UK Services PMI
The Pound to Australian Dollar could edge higher following the release of the latest flash UK PMI data. The manufacturing and service sectors expect to show an expansion of growth. This could allow the Pound to extend this week’s gains against AUD.
GBP/AUD Forecast
Looking ahead, the GBP/AUD exchange rate could extend last week’s gains on a dovish RBA, and jump higher on upbeat UK inflation and flash PMIs.