The Pound to Australian Dollar (GBP/AUD) exchange rate has fluctuated since markets opened this morning. China, Australia’s largest trading partner, announced a crackdown on ‘speculators and hoarders’ to deflate the rise in raw materials like iron ore, pressuring the commodity-correlated ‘Aussie.’
Meanwhile, a lack of any notable data from the UK has also left Sterling open to losses this morning.
Last Week: UK Lockdown Easing Bolsters Sterling
The Pound rose steadily against the Australian Dollar last week as much of the UK entered the next stages of lockdown easing, and the UK unemployment rate unexpectedly dropped.
The risk-correlated Australian Dollar had weakened during the middle of the last week as the latest minutes from the Federal Open Market Committee (FOMC) hinted at tightening monetary policy, fuelling a global risk-off mood and weighing on AUD.
The GBP/AUD pairing ended the week on a higher note as UK retail sales surged and flash PMI data showed the services sector grew at its fastest pace since 2013.
Three Things to Watch for This Week
- Coronavirus Developments
A quieter economic data week for both the UK and Australia will instead see investors keep an eye on any coronavirus developments over the week. Any indication that the Indian variant of the coronavirus could derail the UK’s lockdown easing roadmap could cause Sterling to suffer.
- Global Market Mood
AUD traders will be focusing on the global market mood for much of the week, a lack of data leaves the ‘Aussie’ open to losses, and risk-averse trade amid US inflation concerns this week could cause the currency to weaken.
- Commodity Prices
After China warned against ‘excessive speculation’ in raw materials such as iron ore and copper and commodity prices fell, market sentiment soured and weakened the commodity and risk-sensitive ‘Aussie’. If commodity prices continue to fall this week, AUD exchange rates could come under further pressure.
This week’s economic calendar is quieter for both the UK and Australia which could see global market mood and coronavirus developments drive movement in GBP/AUD.