The Pound Australian Dollar (GBP/AUD) exchange rate climbed to a fresh one-month high last week. Better than expected UK PMIs and Bank of England (BoE) rate hike bets bolstered the pairing.
What’s Been Happening: Pound Strengthened by Above-Forecast PMI Figures
The Pound (GBP) stumbled at the start of last week. Sterling suffered from signals that an agreement on Northern Ireland’s post-Brexit trading arrangements may not come as soon as first hoped.
GBP then found support from better-than-expected PMI figures on Tuesday. February’s private sector output rose by more than expected.
Sterling also benefitted from some hawkish signals from BoE policymakers over the past week.
The Australian Dollar (AUD) struggled to gain much ground over the past week. The latest hawkish minutes from the Reserve Bank of Australia (RBA) lent support to AUD on Tuesday.
However, these gains were quickly released after Australia’s wage price index printed below forecast in the fourth quarter. The data weakened inflation expectations and prompted pullback in RBA rate hike bets.
The risk-sensitive Australian Dollar saw further losses at the end of the week amid a weakening of global risk appetite.
Weekly Highlights
- Northern Ireland Protocol
Markets will be keenly awaiting the parliamentary vote on Prime Minister Rishi Sunak’s proposed agreement. Could the Pound see gains if the deal passes through parliament?
- BoE Governor Andrew Bailey Speech
Following last week’s hawkish rhetoric, traders will be watching Bailey’s speech from any hints regarding forward policy. Could Sterling climb if Bailey reiterates the need to tame inflation?
- AU Q4 GDP Data
Growth in Australia’s economy is forecast to have accelerated in the fourth quarter of 2022, potentially boosting the ‘Aussie’ in the process.
GBP/AUD Forecast
The Pound could be pushed higher by the final reading of February’s PMIs on Friday. The data is expected to confirm a healthy rebound across all sectors this month.
For the Australian Dollar, a forecast healthy retail sales report from January could strengthen the currency on Tuesday. Additionally, positive PMI data from China on Wednesday could boost the Aussie if it prints as forecast.