Pound Australian Dollar Exchange Rate Forecast: GBP/AUD Fluctuates amid Volatile Market Mood

Trade in Pound Australian Dollar (GBP/AUD) exchange rate was erratic last week. Fears of a global banking crisis led to mixed risk appetite. A pullback in Bank of England (BoE) rate hike bets limited gains for Sterling.

What’s Been Happening: Pound Dented by BoE Rate Hike Bet Pullback

The GBP/AUD exchange rate fluctuated over the past seven days. The collapse of Silicon Valley Bank (SVB) at the beginning of the week proved to a key source of this volatility.

While the Pound (GBP) weakened in response, the Australian Dollar (AUD) actually firmed as a paring of Federal Reserve interest rate expectations bolstered market risk appetite.

Tuesday’s cooler wage growth figures prompted further losses for Sterling as markets pared back BoE rate hike bets.

GBP then found support from the UK’s spring budget on Wednesday. The latest forecasts from the Office of Budget Responsibility (OBR) indicated that the UK would narrowly avoid a 2023 recession.

AUD was also pushed higher on Wednesday thanks to positive data from China. The ‘Aussie’s gains were then reinforced after the People’s Bank of China (PBOC) cut reserve rates to help shore up domestic growth.

The Australian Dollar remained on the front foot after upbeat employment data on Thursday. Domestic unemployment fell to 3.5% in February amid a stronger-than-expected uptick in employment growth.

Weekly Highlights

  1. BoE Interest Rate Decision

Recent data has prompted calls for the BoE to pause policy tightening at their meeting on Thursday. Could such a move result in deep losses for Sterling?

  1. UK Inflation Data

Ahead of the BoE’s meeting, March’s CPI figures are expected to report another cooling of inflation. Will this reinforce expectations for a rate hike pause from the BoE?

  1. RBA Meeting Minutes

Whilst the RBA has previously hinted at a slowdown, recent employment data has bucked the trend. Will the minutes reaffirm the central bank’s dovish stance?

GBP/AUD Forecast

The Pound Australian Dollar exchange rates will also be influenced by the latest UK and Australian PMI releases. Will the UK releases outperform the AU figures and help propel Sterling higher?

Gareth Monk

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