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GBP/AUD Sustains Solid Gains on Bank of England Rate Hike Bets

Last week’s high: AU$1.8349

Last week’s low: AU$1.8050

Global Trade Concerns Smooth Way for GBP/AUD Gains

While it slipped slightly from its best levels towards the end of the week, the Pound to Australian Dollar exchange rate saw solid gains throughout last week’s trading session thanks to rising bets that the Bank of England (BoE) would hike UK interest rates in May.

BoE interest rate hike bets were just one reason behind GBP/AUD’s strong gains however. Pound investors were also pleased with strong UK jobs and retail data, as well as news that the UK and EU had finally agreed to a post-Brexit transition period.

This made it easier for Sterling to advance against the Australian Dollar, which was held back all week by risk-aversion in markets due to continued protectionist rhetoric on global trade from Donald Trump.

Concerns that stricter US trade rules could spark a trade war with China, Australia’s biggest trade partner, left the export commodity-correlated Australian Dollar unappealing throughout the week.

AUD Outlook: GBP/AUD to be Driven by UK Growth and Trade News

Of course, with investors still jittery about the possibility of rising trade tension between the US and China, it’s likely that Australian Dollar trade will continue to be largely driven by trade news and risk-sentiment over the next week.

Australia’s economic calendar will be relatively quiet though, with the only notable publications being new home sales and a private sector credit report.

As a result, UK data is more likely to influence GBP/AUD this week. Thursday’s session will be particularly influential, with British growth stats and business investment figures due for publication. Any Brexit news is also likely to influence Pound trade throughout the week.

Key Events

27th March

01:00 Australian HIA New Home Sales

28th March

11:00 UK CBI Distributive Trades

29th March

01:30 Australian Private Sector Credit

09:30 UK Growth Rate

09:30 UK Business Investment

09:30 UK Mortgage Lending and Approvals

30th March

00:00 UK GfK Consumer Confidence

 

James Baxter
Senior Currency Broker
T: 01442 892 062

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