Pound-Australian Dollar could remain under pressure if RBA minutes revive rate hike bets, while a quiet UK calendar leaves Sterling reliant on wider market trends.
The Pound to Australian Dollar (GBP/AUD) exchange rate traded in a wide range last week amid uneven UK economic data and a shifting market mood.
At the time of writing, GBP/AUD was trading at AU$1.9067. Down roughly 0.2% from the start of last week’s session.
DAILY RECAP:
The Pound (GBP) traded in a wide range this week as a barrage of UK economic releases delivered a mixed picture of the domestic economy, leaving investors uncertain over the outlook for Bank of England (BoE) monetary policy.
The week began with softer-than-expected employment data, which showed unemployment holding at 4.9% while wage growth also slowed, with private sector pay increasing at its weakest pace since late 2020.
Sterling remained muted with the subsequent release of the UK’s consumer price index, as an uptick in inflation failed to lift expectations for a BoE rate hike later in the year.
Attempts by the Pound to recover in the latter half of the week then proved short-lived, with GBP exchange rates being undermined by a sharp contraction in retail sales, and struggling to benefit from positive PMIs.
The Australian dollar (AUD) got off to a positive start last week, with the currency benefitting from positive risk flows and a surprise improvement in domestic consumer confidence.
The ‘Aussie’ then faced notable headwinds in the middle of the week, initially giving up ground in response to weak domestic wage data.
The AUD selloff then gathered pace with the publication of Australia’s latest jobs report as a shock contraction in the labour market last month tempered bets for another Reserve Bank of Australia (RBA) interest rate hike later in the year.
However, the Australian Dollar was then about to bounce back again at the very end of the week as widespread weakness in the US Dollar helped to bolster market risk appetite.
Near-Term GBP/AUD Forecast: Hawkish RBA Minutes to Lift the ‘Aussie’?
Looking to the week ahead, a quiet data calendar will see the minutes from the RBA’s latest policy meeting act as the main catalyst of movement for the Pound to Australian Dollar exchange rate.
If the minutes strike a hawkish tone and signal that policymakers are likely to support further tightening, it could help to revive RBA rate hike bets and lift the ‘Aussie’.
Meanwhile, UK economic releases are in short supply this week, likely leaving movement in the Pound to be dictated by wider market trends.
Our currency coverage draws on live market data, official economic releases and published bank research.
