The Pound Australian Dollar (GBP/AUD) exchange rate made gains over the course of last week. The currency pair initially dipped after UK GDP missed forecasts on Monday. Additionally, a surprise rise in Australian business confidence pulled the pair lower.
However, above-forecast UK inflation figures saw the GBP/AUD pair leap on Wednesday and continue to climb until the week’s end.
What’s Been Happening: UK Inflation Soars as Australian Consumer Demand Surprises
The Pound (GBP) dipped lower on Monday after a severe slowdown in UK GDP growth. Figures indicated just a 0.1% increase, below forecasts of 0.3%, as the war in Ukraine hampered supply chains and raw material supplies.
Mixed unemployment data on Tuesday also pushed Sterling lower last week. Whilst February’s unemployment rate fell to 3.8%, individuals in employment missed expectations while wage growth failed to keep pace with inflation.
Wednesday’s better-than-expected inflation figures saw the Pound leap, however, amid increased expectations of a rate hike from the Bank of England (BoE).
The Australian Dollar (AUD) regained some strength at the beginning of last week after Australian business confidence surprised to the upside. Economists stated that the rebound was driven by strong consumer demand.
Poor employment figures saw the ‘Aussie’ slip on Thursday, however. The Australian unemployment rate held at 4%, rather than dropping to 3.9% as was expected.
Weekly highlights
- BoE Speeches
Out of the three upcoming speeches, investors will likely focus on Friday’s speech from Governor Andrew Bailey. Will Bailey signal a hawkish turn from the previously cautious BoE?
- Australia & UK PMIs
Both countries are forecast to show a fall across all private sectors. Could a rise in tourism see a surprise uptick in services?
- UK Retail Sales
UK retail sales are forecast to continue to fall for the second consecutive month. Is the UK’s cost-of-living crisis harming consumer demand?
GBP/AUD Forecast
A poor PMI performance for both Australia and the UK could see the currency pair trade within a narrow range. A hawkish turn from BoE Governor Bailey could push the pair higher, however.