The Pound Australian Dollar (GBP/AUD) exchange rate slumped over the past week. Fresh political instability in the UK pushed the currency pair lower after Lis Truss’ resignation as Prime Minister.
What’s Been Happening: Pound Tumbles as Truss Resigns and Fresh Leadership Contest Begins
The Pound (GBP) slumped over the course of last week. Following increasing pressure from Conservative MPs, Liz Truss resigned as Prime Minister of the UK on Thursday.
Truss’ resignation restored some stability in Sterling. The renewed confidence was short-lived, however. The start of another leadership contest for the post of PM weighed on Sterling.
Some downbeat data releases also prompted losses in GBP last week. A return to double-digit inflation on Wednesday heightened cost-of-living concerns, adding to the UK’s poor outlook.
Additionally, a slump in retail sales on Friday also saw the Pound slip.
The Australian Dollar (AUD) was affected by a volatile risk appetite over the past seven days. The ‘Aussie’ did find some support however amid expectations of further interest rate hikes from the Reserve Bank of Australia (RBA).
On the other hand, employment data indicating a cooler labour market saw investors pare back these bets.
Weekly highlights
- Appointment of New UK PM
Ex-chancellor Rishi Sunak is now expected to become the UK’s new Prime Minister. If MPs coalesce around Sunak then he could be appointed by the end of Monday. Will markets see Sunak as a safe pair of hands?
- Australian Inflation Data
Third quarter inflation is expected to climb to 6.5% in 2022’s third quarter. Will the figures encourage a more aggressive stance from the RBA and prompt bets on further rate hikes?
- UK CBI Data Releases
Data for the UK’s private sectors from the Confederation of British Industry is forecast to show a lack of confidence in UK business’ outlook. Will the poor data push Sterling lower?
GBP/AUD Forecast
A speech from Bank of England (BoE) policymaker Woods on Thursday could bolster the Pound if he adds to interest rate hike bets.
For the ‘Aussie’, signs of an upbeat Chinese economy could help to boost the currency.