The Pound Australian Dollar (GBP/AUD) exchange rate climbed last week, despite dovish comments from a Bank of England (BoE) policymaker.
What’s Been Happening: Pound Mixed amid Dovish BoE Remarks
The Pound (GBP) began the week on unsure footing, as initial gains from an upbeat market mood tapered amid profit-taking.
Bank of England interest rate hike bets fell on Tuesday, following dovish comments from BoE Chief Economist Huw Pill. He indicated the possibility of rate cuts by summer 2024, which infused further volatility into Sterling.
This trend continued through Wednesday, despite a lull in data releases. On Thursday, Pill further stated that additional tightening was unneeded, which weighed on the Pound.
The UK’s third quarter GDP data brought further headwinds to Sterling on Friday. While the UK avoided a contraction in growth, the flat reading pressured GBP exchange rates.
Meanwhile, the Australian Dollar (AUD) began on the back foot, despite an interest rate hike from the Reserve Bank of Australia (RBA). The expectation that the RBA was now finished tightening served to weaken the ‘Aussie’.
Midweek, AUD managed to firm as investors partook in dip-buying. However, a downbeat market mood sapped these gains through to the end of the week.
Three Things to Watch Out for This Week
- UK Inflation
The UK’s latest inflation figures are due to print tomorrow, with economists forecasting cooldowns in both core and headline rates in October. Will cooling inflation dent GBP?
- UK Wage Growth
Wage growth is forecast to have cooled slightly in September, which may weaken GBP if it slips as forecast on Tuesday.
- Australian Jobs Report
Australia will publish its latest jobs report on Thursday. Economists forecast unemployment will have climbed to 3.7% in October, which may pull AUD lower.
Pound Australian Dollar Forecast
The GBP/AUD exchange rate could see further volatility at the end of the week, following the publication of the latest UK retail sales. In October, sales are forecast to have increased by 0.3%, but this may not be enough to reassure investors.