UK Economic Growth Figures and Governor Speech to Guide the GBPAUD Forecast

AUD GBP Trades Above 0.5300 Ahead of Consumer Confidence

Today sees the release of UK Gross Domestic Product (GDP) figures for Q4, alongside a speech by Bank of England (BoE) Governor Mark Carney later in the day. Both of these events should ensure for some volatility in the GBPAUD interbank exchange rate and analysts will be watching closely to adjust their forecasts for the pair. The GBPAUD rate was hovering near the 1.9200 level which provided support into the weekend.

A Cyclical Dip or Continued Post-Election Bounce?

Analysts are expecting an annual growth rate for the quarter of 0.8%, compared to 1.1.% for the previous quarter, however this figure may be able to catch some improvement from the post-election bounce in the UK economy.

The country saw a rebound in its services sector in January, as uncertainty over Brexit began to fade and fears over an “anti-business” government were also cleared up in the December election. The services sector in the UK; which includes banking, insurance, restaurants and hotels, makes up almost 80% of the economy. It may be a little soon to factor in the January 31st Brexit implications, but analysts will be watching for a stronger number, which would see the pound vs Australian dollar forecast change to the upside.

Once the GDP figures are absorbed, the attention turns to Bank of England Governor Carney’s speech to the Parliament’s Lords Committee. Mr Carney is set to leave his role at the BoE, and held interest rates steady at 0.75% in the most recent Monetary Policy Committee meeting, despite traders suggesting a 45% chance of a rate cut.

In statements following the rate announcement, the outgoing Governor was gloomy over the UK outlook with a lowered growth expectation of 0.75% in 2020, reduced from an earlier 1.25%. This makes the GDP figure even more important as investors look for clues on how the economy will perform outside of the European Union.

The initial levels to watch in the pound vs Australian dollar today are the 1.9200 support and the resistance around 1.9350-9400.

Closer to Australia, New Zealand ‘s Reserve Bank will announce its own interest rate decision tomorrow with analysts expecting them to hold the cash rate at 1%. A surprise cut or a more dovish outlook could provide some additional strength to the Aussie dollar in the week ahead.

For more information on GBP/AUD exchange rates for an upcoming currency transfer, please contact myself, Lauren Buckner, using the form below.