Despite a lack of notable domestic support, the Australian Dollar has seen a recovery rally alongside risky peers, capitalising on a weak Sterling and pushing the British Pound to Australian Dollar (GBP/AUD) exchange rate lower towards the end of the week.
After opening the week at the level of 1.7889, GBP/AUD attempted to climb in the middle of the week and trended near a high of 1.7937. However, due to an Australian Dollar rebound, GBP/AUD tumbled on Thursday and at the time of writing on Friday was trending near the level of 1.7785.
GBP Pressured by Trump’s Criticism of UK Government’s Brexit
Despite comments on Friday from US President Donald Trump that the relationship between the UK and US was ‘very strong’, Pound investors remained concerned about comments the President made about the Brexit process overnight.
Trump expressed disappointment with the UK government’s Brexit white paper, saying it dampened the chances for the UK and US to form a quick post-Brexit trade deal.
According to Fiona Cincotta, senior market analyst from City Index:
‘US President Trump has put his counterpart Teresa May in a difficult position this morning saying that a soft Brexit would mean no trade deal between the UK and US. This comes a day after May released a white paper on the UK-Europe relationship after Brexit, offering a softer stance ahead of next week’s vote on a Brexit trade bill.’
AUD Recovers Weekly Losses on Risk Rebound
Thanks to some strong data from China, as well as key support levels keeping risk-correlated currencies buoyed, the Australian Dollar saw much stronger demand on Thursday and Friday.
The Australian Dollar recovered much of the losses it saw against majors earlier in the week, despite a lack of notable support from Australian data.
Australia’s latest consumer confidence stats were strong, but consumer inflation expectations fell in July.
However, China’s latest trade data showed a record high trade surplus with the US, soothing investor anxiety that China’s economy would quickly feel the sting of the US-China trade war.
As China is Australia’s biggest trade partner, AUD investors were more bullish after the report.
GBP/AUD Forecast: Job Market Results and UK Inflation Data Ahead
The Australian Dollar is unlikely to keep pressure on the Pound to Australian Dollar (GBP/AUD) exchange rate for long, especially if US trade protectionism concerns worsen or the US-China trade war escalates further.
However, if upcoming UK data disappoints and Australian data impresses, GBP/AUD is a lot less likely to recover from the past week’s falls.
Tuesday will see the publication of the Reserve Bank of Australia’s (RBA) latest meeting minutes report, as well as Britain’s May job market report.
The most notable factor in the UK job data will be the latest wage growth figures, which combined with Wednesday’s UK inflation results will give investors a better idea of UK price pressures and influence Bank of England (BoE) interest rate hike bets.
Australia’s own job market results will be published on Thursday, but unless there are any developments in UK politics or trade jitters, the UK price pressure news will be the most influential for the Pound to Australian Dollar (GBP/AUD) next week.
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TAGS: Pound Australian Dollar Forecasts