The Pound Australian Dollar (GBP/AUD) exchange rate traded low through the first half of the week as Brexit woes subdued Sterling sentiment. At the end of the week, GBP/AUD rocketed as risk aversion gripped the markets, applying pressure to the Australian Dollar (AUD).
What’s Been Happening: Pound Subdued by Brexit Headwinds, AUD Plummets on Risk-Off Mood
GBP/AUD began the week trading in a narrow range, despite ‘Aussie’ tailwinds as AU Prime Minister Scott Morrison announced the country would reopen its borders. The Pound (GBP) faced downside as analysts predicted a slowing of UK economic growth.
Into Tuesday, the Pound Australian Dollar exchange rate continued trading sideways. Both Australia and the UK printed better-than-expected PMIs, although the UK’s services index revealed a fall on last month.
Midweek, Brexit tensions weighed upon the Pound; meanwhile, AU data revealed a smaller-than-expected decline in construction work, buoying AUD against the majority of its peers.
GBP/AUD saw little movement on Thursday. Sterling benefitted from optimistic Brexit talks, but was then subdued over French fishing threats; the Australian Dollar suffered as central bank policy remained dovish.
At the end of the week, the ‘Aussie’ plummeted: risk aversion gripped markets as a new Covid variant was detected.
Three Things to Watch Out for This Week
- AU GDP
The Australian economy is expected to have contracted last quarter: if the data prints as expected, the ‘Aussie’ may face headwinds.
- AU Trade Balance
Australia’s trade surplus is predicted to have fallen in October – such news may dent AUD.
- Finalised Markit PMIs
Both the UK and Australia will print finalised PMIs this week – a fall in UK services activity is likely to be confirmed, potentially weighing upon Sterling.
Pound Australian Dollar Forecast
The Australian Dollar looks to face pressure this week, although given that downbeat data is from last month and major cities have since come out of lockdown, headwinds may be limited.
Meanwhile, the Pound may trade mixed considering Bank of England (BoE) consumer credit rose in October, but a slide in UK services activity is likely.