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Bank of England (BoE) Uncertainty Knocks GBP/AUD Lower

 

Last week’s high: AU$1.8474

Last week’s low: AU$1.8183

 

Australian Dollar Gains versus Pound Despite Limited Risk-Sentiment

The Australian Dollar has easily been able to sustain gains against the Pound over the last week, but this has been more due to Pound weakness than Australian Dollar strength.

Disappointing UK inflation data and the perceived dovishness of Bank of England (BoE) Governor Mark Carney caused bets of a BoE interest rate hike in May to tumble. This is despite investors previously being confident that the bank would hike rates next month.

The sudden shift in the Pound outlook caused GBP/AUD to fall, despite the Australian Dollar’s own lack of support.

Australia’s latest job market results were underwhelming and risk-sentiment was generally lower at the end of the week, due to rising demand for 10-year US bond yields. This limited GBP/AUD losses.

AUD Outlook: Key Australian Inflation Results Ahead

Next week could be a major one for Australian Dollar trade, as Australia’s Q1 inflation rate results will be published on Tuesday.

Australian inflation is expected to remain close to its Q4 2017 results. Quarterly inflation is predicted to have slowed from 0.6% to 0.5%, with year-on-year inflation forecast to have risen slightly from 1.9% to 2%.

If inflation happens to come in well above expectations, Reserve Bank of Australia (RBA) interest rate hike bets could rise which would boost AUD demand.

Speaking of central bank speculation, the Pound’s movement is likely to be driven primarily by Bank of England (BoE) speculation and comments next week. Britain’s Q1 2018 growth projections on Friday could also influence GBP/AUD however.

 

Key Events

24th April

02:30 Australian Inflation Rate

11:00 UK CBI Business Optimism

26th April

02:30 Australian Export and Import Prices

11:00 UK CBI Distributive Trades

27th April

UK GfK Consumer Confidence

09:30 UK Growth Rate

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To keep up to date with the Australian Dollar, visit the AUD blog in our Currency News section.

 

James Baxter
Currency Trader
T: 01442 892 062

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