Pound Australian Dollar Weekly Forecast: GBP/AUD Fluctuates amid Signs of Sticky UK Inflation

The Pound Australian Dollar (GBP/AUD) exchange rate traded in a wide range last week. UK data proved to be highly varied, with sticky inflation providing some gains.

What’s Been Happening: Pound Kept Aloft amid Hotter-Than-Forecast CPI

The Pound (GBP) saw modest support at the start of the week, amid hawkish comments from Bank of England (BoE) Chief Economist Huw Pill.

Sterling was unable to consolidate these gains and subsequently plunged on the latest UK employment data. Signs of slack in the labour market and cooling wage growth nulled expectations of further tightening from the BoE.

September’s consumer price index data printed above expectations on Wednesday, with headline inflation holding at 6.7%. This revived rate hike bets, but GBP saw its gains trimmed by a volatile market mood.

Owing to a lack of data, GBP traded without much direction on Thursday. Yet, a slump in September’s retail sales figures sent Sterling downward on Friday.

Meanwhile, the Australian Dollar (AUD) initially began on firm ground, as the Reserve Bank of Australia’s (RBA) meeting minutes skewed hawkish.

However, downbeat employment data undermined AUD’s strength on Tuesday. Bearish trade then continued to weigh on the ‘Aussie’ through to the end of the week’s session.

Three Things to Watch Out for This Week

  • UK Unemployment

October’s delayed unemployment figures are finally due to print tomorrow, with economists anticipating the jobless rate will hold at 4.3%. Could signs of tightness in the UK labour market boost GBP?

  • UK PMIs

Tuesday also sees the release of the latest UK private sector indexes. Minor improvements are expected in October, which may bring support to Sterling.

  • AU Inflation Data

Inflation data for the third quarter is due to print on Wednesday, with a significant cooldown anticipated. If inflation cools as forecast, the ‘Aussie’ may weaken.

Pound Australian Dollar Forecast

The GBP/AUD exchange rate could see additional volatility on Tuesday, following a speech from RBA Governor Michele Bullock. If she strikes a hawkish note, AUD could strengthen amid renewed interest rate hike bets.

John Mulcahey

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