Last week’s high: A$1.7714
Last week’s low: A$1.7524
GBP/AUD Fluctuates on Shifting Risk Appetite and Mixed US Data
The Pound Australian Dollar (GBP/AUD) exchange rate encountered significant volatility last week; awash in the ebb and flow of the changing political situation in Italy and US trade tariff measures on steel and aluminium.
Investors were pleased to hear that Italy’s populist parties are now back on track towards a coalition leadership, with Italy’s President Sergio Mattarella approving the latest suggestion for Finance Minister, and newcomer Giuseppe Conte set to be sworn in as Prime Minister.
Whilst this did help to reduce risk aversion, news that the US is still moving ahead with tariff measures against the EU, Mexico and Canada sent anxiety rippling through the markets once again (even though Australia is exempt).
The data calendar last week for both Australia and the United Kingdom was rather sparse, although a rise in UK net consumer credit and an upsurge in UK manufacturing activity did help to kick GBP/AUD higher as the week drew to an end.
The Week Ahead for GBP/AUD: RBA Rate Decision and Aussie GDP on the Horizon
This week could be a big one for the Australian Dollar (AUD), with the Reserve Bank of Australia’s (RBA) latest policy decision (due Tuesday) expected to cause movement.
The Organisation for Economic Cooperation and Development (OECD) has predicted that the Reserve Bank of Australia will start gradually lifting interest rates towards the end of 2018, but these forecasts are at odds with the consensus among analysts – particularly in light of the recent uptick in unemployment.
Regardless, any sign of hawkish sentiment in the accompanying statement or from Bank Governor Philip Lowe could put GBP/AUD under renewed pressure.
Beyond this, investors will be keeping an eye on trade relations between the world’s economic superpowers, with threats of retaliation against the US from various nations liable to continue to curb risk appetite in the markets.
02:30 AUD Australian Retail Sales April
09:30 GBP UK Construction PMI May
12:30 AUD AIG Services Index May
14:30 AUD Australian Current Account Q1
15:30 AUD RBA Interest Rate Decision
02:30 AUD Australian GDP Growth Rate Q1
02:30 AUD Australian Balance of Trade April
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