Five-Day GBP to AUD Exchange Rate Forecast: RBA Decision in Focus
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Next week several factors are likely to inspire considerable movement in the GBP/AUD pairing.
Australian economic reports to look out for over the five days include the nation’s Retail Sales figures, due out on Monday. Sales declined by a seasonally adjusted -0.5% in May month-on-month so investors will be hoping for a rebound in June.
This report will be followed by Australia’s AiG Performance of Services gauge. Australia’s services sector contributes a major amount to domestic growth so if the report remains below the 50 mark separating growth from contraction for another month it could have a detrimental impact on the ‘Aussie’s appeal.
On Tuesday Australia is set to publish its Trade Balance figures and the Reserve Bank of Australia (RBA) will be issuing its interest rate decision.
The central bank is expected to leave policy unaltered, but if RBA Governor Glenn Stevens attempts to talk down the currency (as he has on several recent occasions) the Australian Dollar could plummet against peers like the Pound.
As China is Australia’s largest trading partner, the nation’s Services and Composite PMI could also have an impact on the Australian Dollar on Tuesday.
Over the following few days further Australian Dollar fluctuations could be triggered by the AiG Performance of Construction index and Australia’s employment figures for July.
As the week draws to a close Australia’s Home Loans and Investment Lending reports will be in focus.
This is a particularly data-heavy week for Australia, but developments in the UK are also likely to have a notable impact on the Pound Sterling to Australian Dollar exchange rate – in particular the Bank of England’s interest rate decision.
Economists with an interest in the GBP/AUD pairing will also want to focus on the UK’s Markit Construction and Services PMI, Manufacturing/Industrial Production figures, the National Institute of Economic Research’s GDP estimate for July and UK trade balance figures.
Pound Sterling to Australian Dollar Forecast
If RBA Governor Glenn Stevens does indeed attempt to talk down the Australian Dollar during the RBA policy statement it is likely that some ‘Aussie’ weakness will follow the decision.
However, the Australian Dollar has shown its resilience in the past and if the week’s stream of influential economic fundamentals for Australia print positively the South Pacific asset could recover losses over the following days.
Meanwhile, any negative reports from the UK are likely to see the Pound extend recent declines against peers like the Euro and US Dollar and could cause the Pound Sterling to Australian Dollar exchange rate to trend in a softer position.
Conversely, should the week’s US reports add to the case in favour of a sooner-rather-than-later Federal Reserve hike in borrowing costs, higher-risk currencies like the Australian Dollar may falter.