The Pound to Australian Dollar (GBP/AUD) exchange rate has been volatile in recent weeks, and this volatility looks set to continue today. Despite market optimism that Britain’s economy is on the cusp of gradually reopening from its third coronavirus lockdown, the Pound’s strength has been mixed.
It is climbing against the Australian Dollar this morning on reopening hopes, but both the Pound and Australian Dollar’s movements are mixed as the US Dollar (USD) sees a demand rebound despite high market appetite for risk-taking.
Last Week: GBP/AUD Slips from Highs as Market Optimism Rises
After reaching new peaks at the end of February, GBP/AUD spent the first week of March lower.
As the US finally passed a large stimulus package, markets were more willing to take risks and buy currencies like the Australian Dollar.
Optimism around global recovery from the coronavirus pandemic, not just in the UK, is rising. This is taking some of the shine off of the Pound.
The US Dollar (USD) also strengthened, and as Sterling has been benefitting from USD losses lately this weighed on the Pound’s appeal.
Three Things to Watch For This Week
- Australian Confidence Results
Australia’s February business confidence and March consumer confidence stats will be published early in the week. Strong Australian confidence data would make the ‘Aussie’ more appealing.
- RBA Governor Lowe Speech
Philip Lowe, Governor of the Reserve Bank of Australia (RBA), will hold a speech during Wednesday’s Asian session. If Lowe takes a more hawkish tone on Australia’s economic health, this could boost Australian Dollar appeal.
- UK Growth Rate
Friday will see the publication of Britain’s monthly and 3-month growth rate results from January. Stronger than expected growth could boost optimism about Britain’s economic resilience and support the Pound.
GBP/AUD Outlook
This week’s economic calendar isn’t too busy, but UK growth stats, Australian confidence stats and potential coronavirus developments leave plenty for Pound to Australian Dollar exchange rate investors to react to.