The Pound Australian Dollar (GBP/AUD) exchange rate fell over the course of last week, as the Pound (GBP) succumbed to risk-off headwinds; the Australian Dollar (AUD) found support on upbeat data and strong commodity prices.
What’s Been Happening: Ukraine Crisis Drives Movement
The Pound sank against the Australian Dollar at the beginning of the week as the prospect of ‘peace talks’ between Russia and Ukraine buoyed risk sentiment. Australian retail sales lent further AUD upside, printing 1.6% above predictions.
A mixed policy statement from Reserve Bank of Australia (RBA) Governor Philip Lowe contributed to uneven ‘Aussie’ trading the following session; meanwhile, a better-than-expected manufacturing PMI supported Sterling.
Midweek, GBP seemed to benefit from an upwards correction, while the Australian Dollar was buoyed by strong GDP data.
Towards the end of the week, the ‘Aussie’ hit a 4-month high against the Pound, bolstered by a positive trade balance; Sterling slumped on external factors, as reports confirmed that 1 million refugees had fled Ukraine.
At the end of the week, AUD continued climbing on high commodity prices and retail data, as GBP slid on high risk sentiment.
Three Things to Watch Out for This Week
- Ukraine Crisis
Ongoing fighting in Ukraine is likely to affect currency movements, as South Korea becomes the latest country to announce sanctions against Russia. If Russia retaliates by further limiting energy supplies, trading sentiment will likely weaken.
- Australian Confidence Figures
Australia’s business and consumer confidence figures will be released tomorrow; both are expected to have fallen so far this year, applying likely AUD downside.
- UK GDP
GDP data is expected to reveal no change to the UK’s economy in January. A lack of expansion may exert Sterling headwinds; although GDP looks to have grown on a 3-month basis.
Pound Australian Dollar Forecast
Exchange rates are most likely to trade on Ukrainian developments this week, as the fallout from Russia’s invasion impacts commodity prices, market volatility and international politics.
UK retail sales could also have an effect – tomorrow’s data from the British Retail Consortium is expected to reveal a rise in annual sales, potentially lending Sterling support.