The Pound Australian Dollar (GBP/AUD) exchange rate firmed over the past seven days. The currency pair saw its gains capped by a dovish interest rate decision from the Bank of England (BoE). Disappointing Chinese data kept the exchange rate buoyed, however.
What’s Been Happening: Pound Slumps as BoE Forecasts Recession for UK
The Pound (GBP) was initially boosted by stronger-than-expected GDP figures on Monday. Persistent expectations of a recession kept GBP’s upward movement limited, however.
Mixed jobs data on Tuesday largely weighed on the Pound. A rise in unemployment undermined a bump in wage growth. This, along with a drop in inflation on Wednesday, saw markets pare back their BoE rate hike bets.
Thursday’s interest rate decision from the central bank pulled Sterling lower. Dovish forward guidance alongside the 50bps interest rate hike dented confidence in the Pound.
Finally on Friday, an unexpected slump in November’s retail sales deepened GBP’s losses.
The Australian Dollar (AUD) saw mixed movements at the beginning of last week. An uptick in consumer confidence was offset by a surprise slip in business confidence.
Disappointing Chinese data offset an upbeat jobs report on Thursday. China’s retail sales and industrial production figures both saw a downturn in November.
Weekly highlights
- RBA Meeting Minutes
Investors will be looking to the Reserve Bank of Australia’s (RBA) minutes for direction this week. Will hawkish signals boost the ‘Aussie’?
- UK GDP Figures
The final reading of third quarter GDP data on Thursday is set to confirm a contraction in the UK’s economy. Will the data dent GBP?
- UK Distributive Trades Data
The barometer of health for the retail sector is expected to have fallen further in December. Could the figures add to the sector’s already gloomy outlook?
GBP/AUD Forecast
The impact of widespread industrial action in the UK could continue to weigh on the Pound this week, while signs that the Chinese economy could be struggling with its reopening amid a possible Covid wave may keep pressure on AUD.