The Pound Australian Dollar (GBP/AUD) exchange rate traded erratically last week. A fluctuating market mood translating into some notable volatility into GBP/AUD.
Last Week: Pound Australian Dollar Fluctuating in Mixed Market Mood
The Pound (GBP) traded in a wide range against the Australian Dollar (AUD) last week.
Sterling initially rallied on the back of some hawkish comments from Bank of England (BoE) policymaker Catherine Mann. Mann suggested the BoE will need to ‘stay the course’ and continue raising interest rates.
At the same time the ‘Aussie’ initially tumbled as renewed US-China tensions weighed on the risk-sensitive currency.
The Australian Dollar then immediately recovered following a hawkish interest rate decision from the Reserve Bank of Australia (RBA).
The GBP/AUD exchange rate swiftly rebounded in mid-week trade. The pound was bolstered by suggestions the UK may avoid a recession in 2023, while a souring mood weighed on AUD.
Sterling then firmed on the back of comments from BoE Governor Andrew Bailey. Who suggested the bank needs to ‘see more evidence of inflation pressures easing’.
Closing out the week was the UK’s latest quarterly GDP release. The fourth quarter release revealed the UK narrowly avoided a recession in 2022. Helping the Pound to consolidate its gains in the second half of the week.
Three Things to Watch out for This Week
- UK Inflation
January’s consumer price index is forecast to show UK inflation remained in double digits. Will this strengthen BoE rate hike bets and underpin the Pound?
- UK Jobs Report
Sterling sentiment will also be influenced by the UK’s latest jobs report. Another strong wage growth reading is also likely to bolster BoE rate expectations.
- Australian Jobs Report
The publication of Australia’s own jobs figures will dictate the direction of the ‘Aussie’ this week. If employment growth underwhelms again in January, AUD exchange rates could plunge.
Pound Australian Dollar Outlook
In addition to some notable data releases, movement in the GBP/AUD exchange rate is also likely to remain sensitive to market sentiment this week, potentially leading to more volatility in the pairing.