The Pound Australian Dollar (GBP/AUD) exchange rate climbed over the past week. The currency pair saw some volatile shifts, however. A risk-on mood initially saw the exchange rate slip, although signals of a dovish pivot from the US Federal Reserve helped boost Sterling.
What’s Been Happening: Pound Bolstered by Fed Rate Hike Slowdown Bets
The Pound (GBP) gained ground over the past seven days. The currency slipped over the first half of the week, however, as downbeat data releases added to the UK’s poor outlook.
The latest retail sales figures on Monday indicating a fall dented confidence in the sector and weighed on GBP.
Sterling regained a positive sentiment towards the end of the week amid signals that the Fed would be slowing its pace of policy tightening. Fresh optimism in the UK-EU negotiations over the Northern Ireland Protocol also bolstered Sterling.
The Australian Dollar (AUD) ticked lower at the beginning of last week. A contraction in the country’s retail sector weighed on the ‘Aussie’.
News that China would be easing its Covid-19 restrictions and providing economic stimulus then saw AUD climb.
However, poor Chinese private sector data saw AUD slip again against GBP at week’s end.
Three Things to Watch Out for This Week
- RBA Interest Rate Decision
The Reserve Bank of Australia (RBA) is forecast to raise interest rates by 25bps. With the hike largely priced in, will the announcement weigh on AUD?
- Australian GDP Data
The Australian economy is expected to have slowed slightly in the third quarter of 2022. Any surprise results may trigger significant AUD movement.
- UK Retail Sales
The British Retail Consortium’s (BRC) latest figures are expected to slip in November. Could the data add to the sector’s already downbeat outlook and see GBP fall?
GBP/AUD Forecast
The promise of further industrial action in the UK could weigh on the Pound this week. Further house price data could also dent confidence in Sterling.
Meanwhile, market sentiment will likely drive the risk-sensitive ‘Aussie’. Will easing Covid restrictions in China push AUD higher?