The Pound Australian Dollar (GBP/AUD) exchange rate saw some volatile movement over the course of last week. The pairing did make gains as the week went on. GBP/AUD was boosted by hotter-than-expected UK inflation data, which in turn prompted renewed Bank of England (BoE) bets.
What’s Been Happening: Pound Climbs as UK Inflation Remains in Double Digits
The Australian Dollar (AUD) found strength at the opening of lats week from hawkish Reserve Bank of Australia (RBA) meeting minutes. Alongside mixed BoE bets, this dampened enthusiasm for the currency pairing.
Above-forecast UK wage growth figures bolstered the Pound (GBP) on Tuesday. The data pointed to persistent underlying inflation and helped GBP/AUD to recover some lost ground.
On the other hand, a surprise uptick in UK unemployment capped any gains for the pair. Buoyant Chinese growth data also kept pressure on GBP/AUD.
Above-forecast UK CPI figures on Wednesday provided an additional boost to the Pound. March’s inflation remained in double digits at 10.1%. The exchange rate rose as a result.
A retreat in risk appetite at the end of last week pushed the pairing higher. Disappointing UK data limited the Pound’s upward movement however, as retail sales tumbled in March.
Weekly highlights
- Australian Inflation Figures
First quarter inflation is expected to cool to 6.9% on Wednesday. Will the prospect of a cooldown in RBA tightening pull AUD lower?
- AUS PPI
On the other hand, Q1 PPI is expected to tick higher on Friday. Will the ‘Aussie’ find support from evidence of persistent inflationary pressures?
- UK Retail Sector Data
Amid a sparse data calendar for GBP this week, the latest distributive trades figures are expected to rise on Wednesday. Will signs of health in the UK’s retail sector boost Sterling?
GBP/AUD Forecast
The Pound could see movement off the back of BoE rate hike bets this week. Markets have largely priced in a 25bps hike from the central bank at their May meeting.
For the ‘Aussie’, an improvement in profit figures from China’s industrial sector could lent support to the currency.