The Pound Australian Dollar (GBP/AUD) exchange rate fell at the beginning of last week, as energy prices for UK businesses soared. Brexit headwinds maintained downside, as the Australian Dollar (AUD) benefitted from reopening optimism.
UK GDP printed above last month’s figure on Wednesday: however, upside was countered by inflammatory comments from Dominic Cummings over the Northern Ireland (NI) Protocol.
Into the current session, the Pound (GBP) resumes its uptrend against the ‘Aussie’ as disappointing Chinese growth data weighs upon AUD sentiment.
What’s Been Happening: Brexit Subdues GBP, AUD Pressured by Chinese GDP
The Pound faced headwinds at the beginning of last week as energy prices threatened UK business prospects.
Meanwhile, the lifting of lockdown restrictions across parts of Australia buoyed AUD trading. On Tuesday, an unexpected jump in AU business confidence supported the Australian Dollar further.
Midweek, both currencies struggled for direction as Brexit concerns weighed upon the Pound and Australia printed a weaker-than-expected consumer confidence figure. The Reserve Bank of Australia (RBA) maintained that it would keep a cautious policy stance.
Upbeat GDP lent support to the Pound into the second half of the week – upside pressure was sustained by EU-UK cooperation. The Pound then fell on energy concerns, while the Australian Dollar ticked up on mixed employment data, as investors chose to focus upon a rise in new full time positions.
Into this week, disappointing Chinese GDP weighs upon the ‘Aussie’.
Three Things to Watch Out for This Week
- UK Inflation
September’s core inflation is expected to fall, potentially reassuring investors afraid of runaway growth.
- PMI Flash data
Australian PMI manufacturing and services data is expected to rise on Thursday; UK PMIs are predicted to fall.
- UK Retail Sales
UK retail sales are expected to demonstrate growth for the month of September.
Pound Australian Dollar Forecast
UK inflation will likely drive movement in the Pound Australian Dollar exchange rate on Wednesday; into the rest of the week, PMI data and retail sales may influence trading.
In the meantime, GBP/AUD is likely to trade on central bank dynamics, as the most recent RBA meeting minutes precede a speech by Bank of England (BoE) governor Andrew Bailey tomorrow.