Pound Australian Dollar Exchange Rate News: GBP/AUD Wavered ahead of Crucial Week for Key UK Data

November 14, 2022 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Wavered ahead of Crucial Week for Key UK Data

Pound (GBP) Quiet ahead of Autumn Statement

The Pound (GBP) remained relatively muted on Monday morning as investors await a busy week of macro data. With inflation reading, employment data, and the autumn statement all coming up, Sterling faces a tumultuous week.

A lack of major data to start the week off left the Pound open to domestic issues and market sentiment. The autumn statement has been in focus for GBP investors and the wider market. Chancellor Jeremy Hunt made statements over the weekend alluding to the difficult decisions he’s made in regard to tax rises and spending cuts. Prime Minister Rishi Sunak also made comments about the upcoming fiscal statement:

‘Financial conditions in the UK have stabilised clearly, but they have stabilised because people expect the government to take the decisions that will put our public finances on a sustainable trajectory, and it’s the government’s job to deliver on that. And that’s what the chancellor will do.’

Meanwhile, providing a moderate headwind to the Pound is the weight of an ever-darkening economic outlook for the UK. The National Institute of Economic and Social Research (NIESR) has said they expect UK GDP to remain under pressure and will remain flat through the rest of 2022 and contraction risks remain elevated.

Australian Dollar (AUD) Buoyed by Hawkish RBA Minutes

Meanwhile, the Australian Dollar (AUD) found some modest strength in the wake of the release of the Reserve Bank of Australia (RBA) minutes from the last policy meeting.

Despite the central bank only opting to raise interest rates by 25bps at the last monetary policy meeting, hawkish comments from the meeting gave optimism to investors. Comments alluded to the RBA stating that future rate hikes are required to bring inflation down. Reuters commented on the minutes:

‘Still, the Board emphasised that inflation in Australia was too high at 6.1% and likely to rise toward 7.75% by year-end, with rents and utilities adding to cost pressures. The Board was resolute in returning inflation to its 2-3% target band and recognised this required keeping inflation expectations well anchored.’

Elsewhere, troubling news out of China are weighing on the risk-sensitive ‘Aussie’. Saturday saw the number of Covid infections rose from 11,950 to 15,000 in just one day. With hopes of strict zero-Covid restrictions relaxing, the surge in infections is unlikely to allow Chinese authorities to waver. China’s National Health Commission (NHC) released a statement:

‘It is necessary to maintain strategic focus, and scientifically and accurately do the work of epidemic prevention and control.’

GBP/AUD Exchange Rate Forecast: UK Macro Data to Bolster the Pound?

Looking ahead, the Pound Australian Dollar exchange rate could see further volatile trading conditions with a flurry of key UK data releases. Employment data could see Sterling wobble as the unemployment rate is set to remain steady at multi-year lows but a fall in employment could weigh on the Pound.

Elsewhere, inflation data on Wednesday could set up an interesting autumn statement on Thursday as the central bank continues to battle inflation as the Chancellor and Prime Minister look to balance the books.

Meanwhile, with no major data for the risk-sensitive ‘Aussie’ until Thursday, the Australian Dollar will be left exposed to a shifting market sentiment.

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