The Pound to Australian Dollar (GBP/AUD) exchange rate ended Friday near 1.9189 after a volatile final week of July left the pair little changed for the month.
UK business surveys and Australian spending and trade figures will shape direction in the days ahead.
WEEKLY RECAP:
The Pound to Australian Dollar exchange rate (GBP/AUD) endured a choppy final week of July, falling towards 1.90 before recovering above 1.92 and then easing into Friday’s close.
Pound Sterling strengthened after the Bank of England kept Bank Rate at 3.75%, with three Monetary Policy Committee members voting for an immediate increase.
However, Governor Andrew Bailey pushed back against suggestions that a September hike was taking shape.
MUFG judged the BoE’s communication “supportive” for Sterling, but said that deliberate pushback against rate-rise expectations limited the scope for further upside.
The Australian Dollar also finished the week firmly.
Australian inflation slowed more than expected during the second quarter, prompting markets to almost completely remove the prospect of an RBA hike at its August meeting.
Despite that repricing, the Australian Dollar reached a six-week high against the US Dollar. Broad Dollar weakness, positive risk appetite and demand linked to Australia’s role in the AI investment supply chain outweighed the softer domestic rate outlook.
Scotiabank described the Australian Dollar as an outperformer, although the reduced prospect of further RBA tightening leaves it more exposed to weaker domestic figures.
Near-Term GBP/AUD Forecast: Australian Spending and Trade Data in Focus
For Pound Sterling, Monday’s final manufacturing PMI is followed by Wednesday’s services survey and Thursday’s construction PMI. Further weakness in construction would reinforce concerns over the UK growth outlook.
For the Australian Dollar, Monday brings the Melbourne Institute inflation gauge. Tuesday’s household spending report and ANZ job advertisements will offer fresh evidence on domestic demand and employment.
Thursday’s goods trade balance is forecast to remain in deficit, although the shortfall should narrow from A$3.02 billion to A$1.08 billion. Chinese trade figures on Friday will also be important for Australia’s export-sensitive currency.
Resilient UK surveys alongside weak Australian spending or trade data could lift GBP/AUD towards 1.94. Stronger Australian figures and supportive Chinese data would expose 1.90.
Our currency coverage draws on live market data, official economic releases and published bank research.
