The Pound Australian Dollar (GBP/AUD) exchange rate saw some volatile movement over the past week. The pairing came under pressure after an unexpected interest rate hike from the Reserve Bank of Australia (RBA).
What’s Been Happening: Australian Dollar Bolstered by RBA Rate Hike
GBP/AUD initially saw thin trading conditions at the start of the week. This was due to a national holiday in the UK and Australia. The pairing ticked lower amid a positive risk tone.
The RBA’s surprise interest rate hike on Tuesday shocked markets. The decision prompted a surge in the Australian Dollar (AUD).
The move came after previous signals of a pause in policy tightening. The pair fell in response. The ‘Aussie’ trimmed some of the RBA-motivated gains as the week went on, however.
Meanwhile, Bank of England (BoE) rate hike bets lent support to the Pound (GBP) over the week.
The UK’s April services PMI was revised higher on Thursday. This provided a welcome boost to Sterling. Alongside a surprise contraction in China’s services sector, the pairing’s downturn was limited after a surprise leap in Australian trade data.
Finally, hawkish signals from the RBA on Friday saw the pairing fall further. The central bank’s latest policy statement underlined the risks to the upside of underlying inflation.
Weekly highlights
- BoE Interest Rate Decision
The central bank is expected to hike rates by 25bps at their meeting this week. Will hints of additional hikes push Sterling higher?
- UK GDP Figures
UK GDP is forecast to have risen modestly in the first quarter. Will this be enough to boost the Pound?
- Australian Consumer Confidence
If May’s confidence slips as expected, could it prompt a downturn in the ‘Aussie’?
GBP/AUD Forecast
Also potentially impacting the GBP/AUD exchange rate this week will be China’s latest consumer price index. Will a forecast cooling of inflation in April undermine?