Pound Australian Dollar (GBP/AUD) Exchange Rate Peaks, Dips on UK Cost-of-Living

The Pound Australian Dollar (GBP/AUD) exchange rate rose through the first half of the week as risk aversion limited Australian Dollar (AUD) gains, but dropped on Friday as investors heeded the UK’s ongoing cost-of-living crisis.

What’s Been Happening: RBA Rate Hike Lends Brief AUD Support

The ‘Aussie’ sank against the Pound (GBP) at the beginning of the week as tensions between China and Australia dented AUD optimism.

The Reserve Bank of Australia (RBA) decided to hike interest by 0.5% on Tuesday, lending the Australian Dollar brief tailwinds; AUD subsequently dipped, as markets worried that aggressive moves by central banks could stifle global economic growth.

Midweek, economic concerns kept the lid on further Sterling gains, as energy-industry leaders said that the government’s windfall tax could deter investment; the ‘Aussie’ rose but surrendered its gains on weak commodity dynamics.

Subsequently, Sterling catapulted up against the Australian Dollar as Boris Johnson addressed concerns about the burden of taxation in the UK; AUD losses were capped by China’s upbeat trade balance.

At the end of the week, GBP/AUD trended down on GBP weakness. Data from the Office of National Statistics (ONS) indicated that 9 in 10 individuals surveyed are seeing the cost of living increase.

Three Things to Watch Out for This Week

  1. BoE Interest Rate Decision
    The Bank of England (BoE) are expected to hike interest rates on Thursday by 0.25%, potentially buoying GBP.
  2. AU Confidence Data
    Business confidence is expected to have increased according to tomorrow’s data, although consumer confidence looks to have worsened. Either release may affect AUD.
  3. Employment Data
    Unemployment in the UK is forecast to have fallen in April, while Australia’s May unemployment rate also looks to have dropped. Both currencies may enjoy tailwinds.

Pound Australian Dollar Forecast

The Pound Australian Dollar (GBP/AUD) exchange rate may also be affected this week by Chinese data as well as political concerns, both international and domestic.

The UK is due to publish the Northern Ireland Protocol Bill today, which may inspire volatile trading if Europe’s response is negative.

Olivia Evershed

Contact Olivia Evershed


Related
Do Not Sell My Personal Information