The Pound Australian Dollar (GBP/AUD) exchange rate tumbled last week, as upbeat Australian data supported the Australian Dollar (AUD) while the Pound (GBP) was subdued by the cost-of-living-crisis as well as domestic and international politics.
What’s Been Happening: ‘Partygate’ Scandal Saps PM Support
The Pound Australian Dollar traded in a narrow range at the beginning of last week as a lack of significant data on either side made for muted trading conditions.
On Tuesday, Chinese manufacturing data impressed, supporting AUD as a proxy for China’s economy while the Bank of England (BoE)’s consumer credit data exceeded forecasts. Sterling sentiment weakened as households took on more debt to cope with rising living costs.
Midweek, Australia’s GDP release surprised to the upside, lending support to the ‘Aussie’. In contrast, the Pound continued to face headwinds over UK leadership concerns and Brexit tensions.
In the second half of the weekly session, GBP failed to rally against the Australian Dollar, as markets were quiet amidst the queen’s jubilee celebrations.
Further capping AUD losses, Australia’s trade balance exceeded expectations while retail sales met forecasts. On Friday, the country’s finalised services PMI was revised up to 53.2 from earlier estimates as business confidence rose to its highest since December 2021.
Three Things to Watch Out for This Week
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BRC Retail Sales Monitor
The British Retail Consortium (BRC) are expected to report a further drop in UK sales in May, potentially denting GBP sentiment.
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RBA Interest Rate Decision
The Reserve Bank of Australia (RBA) is expected to increase interest rates by 0.25% tomorrow, lending AUD a possible boost.
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NAB Business Confidence
Business confidence in Australia looks to have improved in May, lending likely support to the Australian Dollar.
Pound Australian Dollar Forecast
The Pound Australian Dollar exchange rate is also likely to be affected by external factors this week, including geopolitical headwinds over the ongoing war in Ukraine.
Elsewhere, today’s confidence vote in UK Prime Minister Boris Johnson could bolster the Pound as a positive outcome for the PM would clear up recent political uncertainty.