The Australian Dollar has closed off the week in a strong position against the Pound ahead of key Australian confidence figures and UK jobs and inflation stats.
Australian Dollar Pound Exchange Rate Rallies after RBA Downplays Recession Fears
While the statement has had its negative predictions, covering a possible downturn in the housing market, the main focus has been on the assertion that the Australian economy was unlikely to have entered a recession over the second half of 2016.
Another supportive AUD factor has been the price of iron ore, with its rebound benefiting Australian mining exporters.
Although the UK has seen manufacturing production rise on Friday, this has come alongside the news that monthly industrial production as well as annual construction output levels have both slowed in December.
Australian Dollar Gains Possible if National Confidence Rises Next Week
Looking ahead to next week, the first major Australian announcements will come on Tuesday and Wednesday, consisting respectively of the NAB business confidence figure for January and the Westpac consumer confidence result for February.
Both results are considered to be high impact, so high Australian Dollar demand going into the middle of next week is partly dependent on rising confidence, as well as any positive movements for iron ore prices.
Pound Volatility Likely on Next Week’s UK Inflation and Jobs Figures
The next UK data to watch out for will come on Tuesday evening, when core and base inflation rate figures are due ahead of jobs data on Wednesday evening.
With UK inflation forecast to rise dramatically by the Bank of England (BoE), the focus is now on wage growth and whether it will rise faster to compensate for higher prices.
At the present time, this outcome seems unlikely, with a recent BoE agent’s survey estimating a slowdown from 2.7% to 2.2% for wage growth and a rise of 2.7% for inflation in 2017.
Broadly speaking, if inflation rises and wages drop next week, the Pound is likely to flop against the Australian Dollar.
Recent AUD GBP Interbank Exchange Rates
At the time of writing, the Australian Dollar Pound (AUD GBP) exchange rate was trending in the region of 0.61 and the Pound Australian Dollar (GBP AUD) exchange rate was trending in the region of 1.62.