Last week’s high: A$1.7982
Last week’s low: A$1.7594
UK Q1 GDP Estimate Disappoints – GBP/AUD Trades on the Back Foot
The Pound Australian Dollar (GBP/AUD) exchange rate encountered pressure last week, falling as investors reacted to news that the UK’s Q1 economic growth was rather soft.
According to the 2nd estimate from the Office for National Statistics, UK GDP grew by 1.2% during the first three months of the year – a five-year low that was predominantly caused by a -2.7% decline in Britain’s construction sector.
Analysts differ regarding the cause for this decline, with the BoE claiming that the “Beast from the East” was the predominant cause, but the ONS downplaying the influence of the severe weather.
For the ‘Aussie’ Dollar, last week’s data calendar was rather sparse, though progress in US-China trade relations seemed to provide a consistent boost.
China has agreed to confront their substantial trade surplus with the US by expanding their import of US goods and services, whilst also confronting their technology licensing measures which discriminate against holders of foreign intellectual property rights.
Whilst it is still early days, this news nonetheless perceivably reduced the possibility of a tit-for-tat trade war occurring, raising risk appetite amongst investors and returning demand for AUD.
AUD Outlook: Australian Manufacturing and a Raft of US Ecostats
Barring the AiG performance of manufacturing index (due Thursday), this week is, once again, a rather quiet one for Aussie data.
Investors will have a whole host of significant US data releases to digest, however, including the latest Q1 GDP reading, the ADP employment change result, the advance goods trade balance figures, the ISM manufacturing report and the latest on US payrolls.
If the US economy continues to gain speed then we could see anticipation for a June rate hike at the US Federal Reserve hitting fever pitch – an eventuality that could cripple demand for the ‘Aussie’ Dollar.
Week Starting May 28th
14:00 USD US Consumer Confidence Index (May)
12:30 USD Gross Domestic Product Annualized Q1
12:30 USD Personal Consumption Q1
12:30 USD Core PCE Q1
12:30 USD Advance Goods Trade Balance April
01:30 AUD Private Sector Credit April
12:30 USD PCE Core
22:30 AUD AiG Performance of Manufacturing Index May
12:30 USD Change in Non-farm Payrolls May
12:30 USD Unemployment Rate May
12:30 USD Average Hourly Earnings May
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