The Pound Australian Dollar (GBP/AUD) exchange rate trended down overall last week, as Pound (GBP) sentiment was subdued by inflationary pressures and Spring budget measures.
Meanwhile, the Australian Dollar (AUD) was supported by rising commodity prices and a comparatively risk-on mood.
What’s Been Happening: GBP Weakens on Sunak’s Budget; ‘Aussie’ Supported by Commodities
GBP/AUD traded in a narrow range at the beginning of the week, as a lack of significant data capped gains for both currencies.
The following session, the Australian Dollar tumbled on dovish messaging from Reserve Bank of Australia (RBA) Governor Philip Lowe. Losses were limited, however, by rising commodity prices.
Midweek, the Pound Australian Dollar exchange rate sloped down following the UK’s inflation release.
GBP/AUD fell to a 14-month low despite a higher-than-expected CPI reading, as investors were mindful of dovish Bank of England (BoE) rhetoric.
The announcement of the UK’s Spring budget further subdued the Pound, as critics remarked new measures would do little to help millions of low-income families.
Sterling remained subdued for the remainder of the week, as PMI data and retail sales missed forecasts. Meanwhile, AUD strength was preserved by commodity prices.
Three Things to Watch Out for This Week
- Australian Retail Sales
Australian sales are expected to have risen by 1% in February, potentially lending AUD support.
- UK GDP
Finalised GDP growth figures for Q4 2021 look to remain unchanged from the previous estimate, which could subdue Sterling.
- Ukraine Conflict
Negotiations between Ukraine and Russia are set to resume this week, with a view to ending the war. Any progress in talks could inspire risk-on trading.
Pound Australian Dollar Forecast
Central bank dynamics may also affect the Pound Australian Dollar exchange rate this week, as BoE Governor Andrew Bailey and policymaker Ben Broadbent are due to speak.
If Bailey and Broadbent strike a hawkish tone, GBP may enjoy upside – however, if messaging remains dovish, Sterling could come under pressure.