The Pound Australian Dollar (GBP/AUD) exchange rate fell from a sixteen-month high last Tuesday as the market mood turned increasingly risk-on. GBP gains were stifled by poor UK data and Covid concerns.
What’s Been Happening: AUD Soars on Impressive GDP, Trade Surplus
A risk-on mood boosted the ‘Aussie’ at the start of the week, while poor UK consumer credit subdued Sterling. AUD held onto gains despite a lower-than-expected Ai group manufacturing index.
The Pound continued to tumble against the Australian Dollar on Wednesday despite a higher-than-expected UK manufacturing PMI, as data revealed the slowest pace of expansion in the sector since March. Meanwhile, Australian GDP printed above expectations.
On Thursday, the Pound saw a brief uptick – although progress was dented by officials’ concerns over children returning to school. Unvaccinated age groups are particularly susceptible to coronavirus.
The Australian Dollar cemented its gains at the end of the week despite low-printing data: UK data also printed lower than expected, with the service PMI narrowly missing forecasts. Poor US data lent support as nonfarm payrolls missed expectations by 515K.
Three Things to Watch Out for This Week
- RBA Interest Rate Decision
The Reserve Bank of Australia are not expected to alter interest rates anytime soon, but if tomorrow’s announcement strikes a hawkish tone, AUD could find support.
- UK GDP
The UK’s latest GDP figures are expected to report a slowing of growth in the three months to July, potentially placing some pressure on the Pound later this week.
- Risk Sentiment
As last week’s main exchange rate driver, risk sentiment could support or hinder both GBP and AUD this week.
Pound Australian Dollar Forecast
The GBP/AUD exchange rate has begun to strengthen today as the Pound gains from headwinds to the ‘Aussie’. The RBA’s interest rate decision will likely decide movement through tomorrow’s session: various speeches and Friday’s UK data may influence trading direction later in the week.