The Pound Australian Dollar exchange rate rose as markets reopened this week due to optimism about falling UK Covid-19 infection rates and economic recovery.
AUD struggled against the stronger Pound despite the Reserve Bank of Australia (RBA) leaving interest rates unchanged at 0.1% and expressing cautious optimism in global economic recovery.
Last Week: Sterling Falls Despite Growing Confidence in UK Economy
The Pound struggled against the Australian Dollar last week because of few influential UK economic data releases, although confidence continues growing in the UK economy as Covid-19 infections and deaths remain low.
GBP exchange rates received some support from the Confederation of British Industry (CBI) report that retail sales growth recorded its sharpish upturn since 2018, buoying confidence in the UK economy.
Meanwhile, the China-proxy Australian Dollar has benefited from an improved outlook for the Chinese economy, which showed further signs of recovery. However, rising Covid-19 cases in Japan and India weighed on risk appetite and limited the risk-sensitive ‘Aussie’.
Three Things to Watch Out for This Week
- Bank of England’s Interest Rate Decision
Thursday will see the Bank of England (BoE) announce its interest rate decision, which is expected to remain at 0.1%. However, any upbeat commentary about the British economy would boost the Pound.
- Australian Building Permits
Australian Dollar investors will monitor Wednesday’s publication of the latest Australian building permits figure for March. If this shows an improvement in the outlook for the nation’s economy, then AUD exchange rates could head higher.
- Global Risk Sentiment
The risk-sensitive ‘Aussie’ will continue to be influenced by global risk sentiment this week. Any indications that global Covid-19 rates are falling – particularly in India and Japan – could see demand for the Australian Dollar pick up.
The Pound Australian Dollar exchange rate could continue its upward momentum throughout this week’s session if the UK’s economic outlook continues improving, although any unexpected surprises in the investigation into Boris Johnson’s funding of refurbishments could trigger some volatility.