The Pound Australian Dollar (GBP/AUD) exchange rate hit a one-year high last week. A dovish pivot from the Reserve Bank of Australia (RBA) boosted the pairing on Tuesday. Additionally, better-than-expected growth figures for the UK pushed GBP/AUD higher at week’s end.
What’s Been Happening: Pound Soars as UK GDP Exceeds Forecasts
The Pound (GBP) strengthened against the Australian Dollar (AUD) from the start of last week, despite some GBP headwinds. Poor retail sales data from the British Retail Consortium (BRC) pointed to the damaging effect of soaring price inflation on UK firms.
Dovish comments from Bank of England (BoE) policymaker Swati Dhingra added to the pressure on GBP.
Above-forecast UK GDP figures on Friday provided a welcome boost to Sterling, however. The figures increased hopes that the country may avoid a deep recession.
Meanwhile, the Australian Dollar tumbled over the past week after the RBA’s latest interest rate decision. The central bank hiked rates by 25bps and signalled that they may be close to a pause in policy tightening.
This weighed heavily on AUD through the week, while a downbeat market mood added to the risk-sensitive currency’s woes. The ‘Aussie’ slumped to a one-year low against Sterling.
Weekly Highlights
- UK Spring Budget
Chancellor Jeremy Hunt is expected to unveil the UK’s spring budget on Wednesday. Will the expected further support for households bolster GBP?
- UK Employment Data
With unemployment and wage growth set to rise and fall, respectively, will signs of a cooling labour market pull Sterling lower?
- Australian Jobs Data
Unemployment is set to tick lower in February. Will this boost AUD despite the RBA’s dovish stance?
GBP/AUD Forecast
The Pound could see further movement from sentiment surrounding the Bank of England’s forward stance. Following the bailout of Silicon Valley Bank (SVB), markets are likely to pare back bets on further rate hikes.
For the Australian Dollar, a rise in consumer confidence overnight on Monday could boost the ‘Aussie’. Forecast positive data for China’s private sectors on Wednesday could also bolster AUD.