Last week’s high: AU$1.7931
Last week’s low: AU$1.7576
GBP/AUD Recovers Despite No-Deal Brexit Fears Dominating Sterling
Last week saw volatile movement in the Pound to Australian Dollar exchange rate. GBP/AUD plunged to its worst levels of 2019 at the start of the week in reaction to the rising odds of a no-deal Brexit.
However, the pair spent the rest of the week recovering. Despite no-deal Brexit fears dominating outlooks for both Sterling and the UK economy overall, broad weakness in the Australian Dollar caused GBP/AUD to rise.
Despite Australian inflation, manufacturing and retail sales stats beating forecasts, investors avoided the Australian Dollar in the second half of the week as a result of RBA rate cut speculation.
Towards the end of the week, US President Donald Trump’s clash with China over trade tariffs weakened AUD further. Trump’s attitude effectively culled the US-China trade truce and caused weakness in trade correlated currencies like the ‘Aussie’.
AUD Outlook: Reserve Bank of Australia (RBA) in Focus
With no-deal Brexit fears still dominating the Pound outlook over the coming week, Sterling will likely remain under pressure. Brexit news and rival strength, rather than UK data, can be expected to drive currency fluctuations.
UK services data on Monday and growth data on Friday may bolster Sterling if either, or both, impress, but Australia’s upcoming stats will also be of interest.
Key Australian data includes services PMI on Monday, trade balance data on Tuesday, and construction and home loans on Wednesday.
However, by far the biggest event next week for AUD investors will be the Reserve Bank of Australia’s (RBA) August policy decision which takes place on Tuesday.
Investors expect the bank to hint at further interest rate cuts. If the bank proves less dovish than expected, AUD has a good chance of pushing GBP/AUD back towards its worst levels.
Australian Services PMI
09:30 UK Services PMI
02:30 Australian Trade Balance
05:30 Reserve Bank of Australia (RBA) Policy Decision
Australian Construction PMI
02:30 Australian Home Loans
02:30 RBA Statement on Monetary Policy
09:30 UK Trade Balance
09:30 UK Business Investment
09:30 UK Manufacturing and Industrial Production
09:30 UK Growth Rate
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