The Pound Australian Dollar (GBP/AUD) exchange rate rose over the past week despite a lack of UK data. The currency pair climbed off the back of downbeat Australian data releases and softer Chinese inflation, however.
What’s Been Happening: Australian Dollar Slips amid Signs of Chinese Deflation
The Pound (GBP) began the week without a clear catalyst amid a lack of UK data.
News on Wednesday of a new UK-US gas deal helped the currency to edge higher. The Pound’s gains were limited by the poor outlook for the UK’s economy, however.
The impact of widespread industrial on the country’s hospitality sector also kept GBP’s gains limited.
The Australian Dollar (AUD) began the week bolstered by the Reserve Bank of Australia’s (RBA) interest rate hike. The RBA also signalled further interest rate hikes were to come.
Below-forecast data releases dented confidence in the ‘Aussie’, however. Third quarter GDP growth figures printed worse-than-expected on Wednesday.
AUD also saw losses from poor Chinese data over the past seven days. Softer Chinese inflation figures on Friday weighed on the currency amid fears of Chinese deflation.
The continued paring back of China’s Covid-19 restrictions underpinned the Australian Dollar, however.
Weekly highlights
- BoE Interest Rate Decision
Investors will be looking to the BoE’s forward guidance for impetus around GBP. Will the central bank hint at further rate hikes and see GBP climb?
- UK Inflation Data
Ahead of the Bank of England’s (BoE) interest rate decision, UK inflation is forecast to cool in November. Will the pull the Pound lower on reduced BoE rate hike bets?
- Australian Unemployment Figures
October’s unemployment is expected to remain unchanged in November from October’s low of 3.4%. Could the sign of a tight labour market push AUD higher?
GBP/AUD Forecast
Whilst UK unemployment is forecast to tick higher on Tuesday, the rate is expected to remain close to record lows. The Pound could be bolstered by signs of a tight labour market.
A predicted uptick in Australia’s December PMIs on Friday could push AUD higher if they print as forecast.