The Pound Australian Dollar (GBP/AUD) exchange rate lost ground over the past seven days. The pairing dropping amid signs of slowing UK economic growth.
What’s Been Happening: Pound Stumbles as UK Economy Flatlines
The Pound (GBP) saw muted movements at the beginning of the week amid a lack of data. Alongside strengthening Australian business confidence, GBP/AUD came under pressure initially.
The Australian Dollar (AUD) weakened overnight following a speech from Reserve Bank of Australia (RBA) Deputy Governor Michelle Bullock. The dovish signals helped the pairing to recoup its losses.
GBP/AUD then tumbled in the second half of the week on the back of the latest UK GDP data. The figures showed the UK’s economy stalled in February, pulling Sterling sharply lower.
Additionally, upbeat Australian employment data helped AUD to capitalise on the Pound’s weakness. March’s figures reported a surprisingly strong expansion in employment growth.
The Pound Australian Dollar exchange rate then recoupled some losses at the end of the week. As the ‘Aussie’ struggled amid some profit-taking, a risk-off market mood, and tumbling iron ore prices.
Weekly highlights
- UK Employment Data
While unemployment is expected to remain unchanged at 3.7% in February, wage growth is forecast to slip. Could the drop see GBP tumble?
- UK Inflation Data
March’s inflation is set to ease to 9.8%. Could signs UK inflation is starting to cool prompt a pullback in Bank of England (BoE) bets and pull GBP lower?
- RBA Meeting Minutes
Following last week’s jobs data, markets are now pricing in a 25bps RBA hike. Could the potentially dovish minutes dent these bets and weigh on AUD?
GBP/AUD Forecast
The Pound could wobble on Friday if retail sales decline in March as expected. But an expected rise in April’s services PMI could limit any losses for GBP.
The Australian Dollar (AUD) may face headwinds on Friday if April’s PMIs print as forecast. Output is expected to fall across manufacturing and service sectors.