The Pound Australian Dollar (GBP/AUD) exchange rate wavered through last week’s session before hitting 4-month high on risk-off trading.
Market sentiment was subdued by escalating Covid cases globally, as well as test shortages and hawkish minutes from the FOMC meeting, which put pressure upon other central banks to escalate policy tightening measures.
What’s Been Happening: NHS Face Staffing Crisis; AU PM Criticised
The Pound Australian Dollar (GBP/AUD) exchange rate fluctuated through the first half of the week as both currencies faced headwinds.
Initially boosting Pound (GBP) sentiment, UK Prime Minister Boris Johnson announced that he would not be enforcing new Covid regulations imminently. A clutch of upbeat data on Tuesday extended GBP gains.
Meanwhile, the Australian Dollar (AUD) found some support on optimism in the Chinese property markets, which buoy AUD as a proxy for the Chinese economy.
Midweek, the effects of a staffing crisis in the NHS began to weigh upon Sterling: Covid-related absences led to multiple NHS trusts declaring critical incidents.
The ‘Aussie’ likewise came under pressure from a shortage of rapid antigen tests, in addition to limits on the number of people able to receive free PCR. Australian Prime Minister Scott Morrison was accused of ‘price-gouging’.
At the end of the week, the Pound advanced against the Australian Dollar as a risk-off mood gripped markets. Omicron fears abounded worldwide, as hawkish meeting minutes from the Federal Open Market Committee (FOMC) looked to disadvantage the US Dollar’s rivals.
Three Things to Watch Out for This Week
- AU Balance of Trade
Australian data is expected to reveal a narrowing trade surplus on Tuesday, potentially denting AUD prospects.
- Australian Retail Sales
Australian retail sales are also expected have fallen, applying further ‘Aussie’ downside.
- UK GDP
Friday’s GDP data is expected to show an expansion of the UK economy, likely boosting Sterling sentiment.
Pound Australian Dollar Forecast
The Pound Australian Dollar exchange rate is likely to be driven by external factors midweek, as a lack of data leaves the currencies to trade on risk sentiment.
In the meantime, AU data is likely to decide movement, with retail sales and trade figures potentially subduing AUD and therefore buoying the exchange rate.