Pound Australian Dollar Weekly Forecast: GBP/AUD Exchange Rate Firms as UK Inflation Hits 41-Year High

The Pound Australian Dollar (GBP/AUD) exchange rate climbed last week. The pairing saw some volatile shifts amid a surge in UK inflation. Chinese Covid concerns kept GBP/AUD bolstered, however.

What’s Been Happening: Pound Volatile as Autumn Statement Confirms Recession

The Pound (GBP) saw some dramatic swings over the past seven days.

Jobs data on Tuesday helped strengthen Sterling after signs of strong wage growth. An uptick in unemployment kept gains limited, however.

GBP came under pressure Wednesday after inflation unexpectedly rose to 11.1% in October. On the other hand, speculation of further Bank of England (BoE) interest rate hikes underpinned Sterling.

The UK’s Autumn budget statement on Thursday saw the Pound slump as Chancellor Jeremy Hunt confirmed the UK had entered a recession.

Above-forecast UK retail sales helped the Pound to regain lost ground on Friday, however.

The Australian Dollar (AUD) also fluctuated as a continued surge in China’s Covid cases offset some hawkish meeting minutes from the Reserve Bank of Australia (RBA).

Later in the week a pullback in risk appetite prevented strong jobs data from pushing AUD higher in the latter half of the week.

Weekly highlights

  1. UK PMIs

Performance across the UK’s private sectors is expected to fall further this month if Wednesday’s figures print as forecast. With the UK in a recession, could the figures see the Pound tumble?

  1. RBA Gov Lowe Speech

Investors will be looking to the Reserve Bank of Australia’s (RBA) governor for hints regarding the central bank’s forward policy on Tuesday. Will Lowe reiterate the bank remains open to another 50bps rate hike?

  1. BoE Speeches

Amid a recession and soaring inflation, a number of BoE policymakers are set to give speeches this week. Confirmation of further interest rate hikes could lend support to Sterling.

GBP/AUD Forecast

A drop in UK industrial orders could push Sterling lower on Thursday if they print as forecast.

For AUD, a continued rise in Chinese Covid cases could keep pressure on the currency. Additionally, an expected downturn in private sector output could prompt losses in the ‘Aussie’ on Tuesday.

Gareth Monk

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