The Pound Australian Dollar (GBP/AUD) exchange rate wavered throughout the week as spiking UK gas prices dented the Pound (GBP) and the Australian Dollar (AUD) benefitted from bullish travel comments.
What’s Been Happening: GBP Suffers on Trade Headwinds, AUD PMI Data Impresses
GBP/AUD fell at the start of last week, as UK gas prices surged in cost. Factories producing CO2 (an essential component in food production) closed as energy prices became unsustainable.
Sterling recouped some of its losses on Tuesday as two factories reopened with government assistance. Minutes from the Reserve Bank of Australia (RBA)’s latest policy meeting failed to have much impact on AUD trading.
UK Prime Minister Boris Johnson revealed on Wednesday that a free trade agreement between the US and the UK is a long way off; AUD rose on comments from Tourism Minister Dan Tehan, who told reporters that Australia plans to open its international border by Christmas.
On Thursday, Bank of England (BoE) policymakers conceded that that the case for modest monetary policy tightening strengthened from August, reversing GBP’s downtrend despite positive PMI data from Australia.
Into Friday, the Pound held onto gains as city traders brought forward their forecast for a rate hike to March next year. AUD suffered on a risk-off mood, as the Chinese real-estate giant Evergrande missed a crucial interest payment deadline.
Three Things to Watch Out for This Week
- Australian Retail Sales
Retail sales early tomorrow morning may buoy the ‘Aussie’, if this month’s decline is less than August’s.
- UK Economic Concerns
Concerns over the UK economy are likely to persist this week, likely acting as a headwind for the Pound.
- PMI Data
PMI data for both the UK and Australia on Friday may direct currency movement. Australian manufacturing looks to increase, while its UK counterpart is set to decline.
Pound Australian Dollar Forecast
Looking ahead, speeches from BoE Governor Andrew Bailey may also influence Pound trading, alongside the Bank of England’s consumer credit report for August.