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GBP/AUD Jumps as Australian Inflation Disappoints

Last week’s high: AU$1.7830

Last week’s low: AU$1.7358

Australian Dollar Stumbles as Inflation Fails to Meet Expectations

The Pound rallied against the Australian Dollar last week as Australia’s latest inflation reading missed expectations, only rising to 1.9% against forecasts of 2% in the fourth quarter.

Combined with a significant contraction in building approvals in December, this saw the ‘Aussie’ plummet in the second half of the week.

Meanwhile the Pound was lifted by comments from Bank of England (BoE) Governor Mark Carney, who hinted that the bank may raise its growth forecasts in the coming months.

Sterling’s advance was however slowed down towards the end of the week as the UK’s Manufacturing and Construction PMI’s both came in lower than expected.

AUD Outlook: Central Bank Policy Decisions Likely to Dominate GBP/AUD

Looking to the session ahead, movement in the GBP/AUD exchange rate this week is likely to be driven by the year’s first BoE and Reserve Bank of Australia (RBA) policy meetings.

While neither central bank is forecast to make any changes this month, investors will be watching closely for any hints as to their plans for 2018, with a hawkish outlook from either of them likely to drive their respective currencies higher.

 

Key Events

5th February

09:30 UK Services PMI Jan

6th February

01:30 AU Trade Balance Dec

03:30 AU RBA Rate Decision

8th February

12:00 UK BoE Rate Decision

9th February

09:30 UK Trade Balance Dec

 

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

 

James Baxter
Senior Currency Broker
T: 01442 892 062

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