The Pound to Australian Dollar exchange rate has weakened since markets opened this morning as the risk-sensitive ‘Aussie’ receives support from upbeat market trade.
AUD exchange rates are also strengthening due to rising commodity prices, with a jump in iron ore prices supporting the Australian Dollar.
Last Week: Sterling Selloff Leads to GBP/AUD Plummeting
The Pound jumped at the start of last week amid an optimistic mood that buoyed markets on Monday.
However, Sterling then fell through the week on profit taking and cautious market trade despite stronger-than-expected retail sales and UK PMI data released at the end of the week.
Meanwhile, the risk-correlated Australian Dollar benefited from a pullback in the US Dollar and the Pound’s weakness as an improving market mood and better-than-expected retail sales figures from Australia helped to bolster the currency.
Three Things to Watch Out for This Week
- Australian Inflation Rate Data
The release of the Australian inflation rate for Q1, which is forecast to have risen to 1.5% from 0.9%, could support AUD exchange rates as the economy recovers from the impact of the coronavirus pandemic.
- Federal Reserve Interest Rate Decision
The Federal Reserve’s latest interest rate decision on Wednesday could cause movement in the GBP/AUD pairing, as although interest rates are expected to remain at 0.25%, a continued dovish outlook from the Fed could continue supporting risk-on trade and allow the risk-correlated ‘Aussie’ to head higher.
- Coronavirus Developments
As more people in the UK are offered a coronavirus vaccine and parts of Australia re-enter local lockdowns, any developments regarding coronavirus will remain influential to the GBP/AUD exchange rate.
This week’s economic calendar is quieter for the Pound, which could cause GBP/AUD to weaken due to a lack of data to support Sterling. The global market mood and coronavirus developments are likely to be the main drivers of movement in the pairing.