AUD GBP Has an Important Day of Data Ahead

AUD GBP Higher After Boost to Australian Manufacturing

The AUD GBP exchange rate was higher by 0.25% on Monday ahead of an important two days of economic data. The Reserve Bank of Australia releases its latest minutes alongside a speech from the bank’s governor. The UK will also see employment data released on Tuesday, with inflation on Wednesday.

The AUD GBP exchange rate was trading at 0.5475 ahead of the data which will test the recent rebound.

British economic data and Article 16 could fuel gains

Today sees economic data for the UK economy with the latest employment numbers.

The unemployment rate in the UK is expected to hit 4.4% from 4.5% and a total of 186k jobs added. That would boost prospects for growth but also for a rate hike as a speech from the BOE’s Haskel yesterday hinted that the labor market is being watched by the bank.

Speaking at a Resolution Foundation event, Johnathan Haskel said the economy was “firing on two cylinders” and that it’s “too early to declare success” in getting those on furlough back into work.

The UK will also see inflation this week with Wednesday’s figure expected to show a sharp jump after recent inflationary pressures. There is another potential boost for the pound and the expectations for a rate hike.

The pound should also be supported by comments from the Prime Minister who said there was “nothing in the data at the moment” that would push the government towards its ‘plan B’ winter restrictions. The PM’s spokesperson also said that talks were set to intensify over the Article 16 issue with hopes that it will avoid Brexit-related drama.

“There are significant gaps between our positions. But again, we are going to be continuing talks, intensified talks, between the two teams to try and find a consensual solution,” he said.

Australian dollar boosted by China, looks to Lowe

The Aussie dollar was boosted by Chinese data on Monday with industrial production and retails sales lifted. Some analysts suggested that stockpiling by consumers ahead of potential winter lockdowns were likely a driver of retail sales.

The Australian dollar now looks to the Reserve Bank minutes and the latest speech by the bank’s governor Philip Lowe.

Governor has continued to hold a dovish approach to the bank’s outlook, but traders have been concerned over soaring inflation.

Another issue is the housing bubble and RBA assistant governor Luci Ellis said that intergenerational inequality was a “legitimate concern” and home ownership was increasingly being driven by inheritance.

“People whose parents rented are going to be in a much more difficult situation to actually get into housing themselves,” Dr Ellis said.

“You don’t improve affordability by giving people even more money to then bid up prices,” she said. “Housing market policies that add to demand will only amplify any upswing in prices.”

The week ahead should determine the medium-term path of the Australian dollar versus the pound.

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