The Pound Australian Dollar (GBP/AUD) exchange rate fell over the first half of last week, as prices rose for Australian exports. Meanwhile, the Pound (GBP) was subdued by falling odds of a November rate hike.
In the second half of the week, Sterling gained against the Australian Dollar (AUD) as Evergrande fears gripped markets; these were reversed on Friday as UK retail sales printed below expectations and strong PMI data buoyed AUD.
What’s Been Happening: AUD Firms on Risk Appetite, Pound Dented by Retail Sales
The Pound Australian Dollar exchange rate sank on Monday as surging gas prices in the UK weighed upon GBP. The downturn followed an optimistic morning, as the Bank of England (BoE)’s Andrew Bailey gave hawkish comments over the weekend.
On Tuesday, GBP/AUD climbed on hopes for a November interest rate hike; in the afternoon, ‘Aussie’ upside won over as prices of Australian coal, gas and metals rose.
Into Wednesday, a risk-on mood buoyed the Australian Dollar further, as the Pound suffered from a dip in inflation. Subsequently, the likelihood of a November rate hike fell.
At the end of the week, Sterling found support on a fall in public sector borrowing, while renewed Evergrande concerns rattled AUD investors: poor UK Retail Sales then exerted GBP downside, as the ‘Aussie’ was bolstered by Thursday’s positive PMI data.
Upbeat UK PMIs supported the Pound later in Friday’s session.
Three Things to Watch Out for This Week
- AU Inflation
Australian inflation data on Wednesday is forecast to show slowing growth in the past 12 months.
- UK Autumn Budget
Wednesday’s Autumn budget is expected to reveal a possible public sector pay rise, alongside investment in education and the NHS.
- BoE Consumer Credit
Consumer credit looks to have gone up in September, suggesting people are borrowing and therefore spending more.
Pound Australian Dollar Forecast
In the week ahead, GBP/AUD is likely to be affected by speeches from central bank officials, alongside Australian inflation and retail data. Consumer credit figures from the BoE may also influence trading.
Risk sentiment could impact either currency, with ongoing economic concerns in China potentially weighing upon AUD.