This week will be an important one, not only for the GBP but all of the major currencies as the UK’s General Election takes place. The outcome is likely to have a huge knock-on effect for all currencies that trade with the GBP. Meanwhile, the AUD is riding a positive wave of late, positive economic data from China has seen the Aussie Dollar receive an upswing of support.
GBP/AUD Declines Ahead of This Week’s UK Election but Looks to Rally on Tory Majority Chances
The GBP appears to be in decline ahead of the general election this Thursday. The contributing factors last week were political and economic uncertainty which weighed on the manufacturing sector’s ongoing downturn. There were moments of optimism which drove the Pound back up as a Tory majority looked more likely with the release of opinion polls, a Tory majority would ensure that Brexit gets seen through and this buoyed the Pound throughout the week.
This Tuesday, the UK manufacturing and industrial production figures are due to be released. If they continue the downward pattern that has been observed of late then the GBP’s gains are likely to be limited. Added to this, October’s GDP data is expected, should this fall too then the Pound’s outlook will be flat. Attention will be turned to Thursday’s election and if Boris Johnson’s Conservatives win a majority then the GBP/AUD exchange rate is likely to rise.
Australian Dollar Made Good Progress Last Week but Could Begin to Decline with a Dovish RBA
The AUD made clear gains last week as the Chinese manufacturing data saw the largest expansion since December 2016. This gave the AUD a boost as it’s close links with the Chinese economy meant that this was mutually positive for both countries. However, the AUD is predicted to slump against the Pound following the upcoming speech from RBA governor Philip Lowe. Economists are noting that should his speech be given with an overly dovish tone about the AUD outlook and the weak GDP growth, then the currency is likely to fall. Westpac’s consumer confidence data is also set to be released on Tuesday, should the confidence slide further, the AUD will likely decline with it.
For the upcoming week the main topic will be the outcome of the UK elections, this is likely to be on every nations radar as the outcome will cause ripples in the trading world whatever the outcome. The Aussie Dollar will be hoping for positive data over the week and a pick up in the US-China talks.
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