The Pound to Australian Dollar (GBP/AUD) exchange rate has seen little in the way of movement this week so far. GBP/AUD edged near monthly lows yesterday as the Australian Dollar benefitted from US Dollar weakness and a steady Reserve Bank of Australia (RBA) stance. However, anticipation for upcoming Australian growth data is limiting potential for further ‘Aussie’ gains.
Last Week: Federal Reserve Dovishness Leaves AUD Soaring
Investors piled into the Australian Dollar last week, as markets reacted to the latest Federal Reserve news.
The Fed indicated it would move towards supporting employment rather than inflation, hinting that even looser monetary policy was possible. It also indicated that policy would remain ultra-loose for a considerably long time.
This left the US Dollar (USD) plunging and investors bought rival currencies like the ‘Aussie’. This also pushed the Pound lower against the surging Australian Dollar.
Demand for Sterling remains weak overall. This is due to concerns over the Brexit process, as a lack of progress in talks leaves markets betting that a hard Brexit is increasingly likely.
Three Things to Watch for This Week
- Australian Growth Rate
Markets are currently highly anticipating tomorrow’s Australian growth rate report. The data is expected to show a dire second quarter for Australia’s economy. If the data is even worse, the ‘Aussie’ could see losses.
- PMI Results
Final August PMIs for Australia and Britain will be published towards the end of the week. If the data beats forecasts it could bolster hopes for economic resilience amid the coronavirus pandemic.
- Australian Retail Sales
A busy week for Australian news will be rounded off by retail stats on Friday. If July’s retail sales results beat forecasts they could boost optimism around Australian consumer activity and AUD.
Multiple notable Australian ecostats are due this week. Surprises could influence the Australian Dollar, but the currency could remain strong if rivals like the Pound and US Dollar remain weak.