High Chance of GBP/AUD Turbulence on UK Budget Reveal
Coming out this afternoon, the UK budget plan will show how Chancellor Philip Hammond intends to spend while balancing two major spending factors.
These are Prime Minister Theresa May’s claim that ‘austerity is over’, and the intensifying Brexit process.
On the one hand, the PM’s statement could inspire increased spending; on the other, Mr Hammond may keep his powder dry due to Brexit uncertainty.
As a simple summary, if increased spending is revealed then the Pound could appreciate, while losses or no movement is likely on cautious plans.
This Week’s GBP/NZD Outlook: Will BoE Meeting Bring Pound Sterling Gains?
Looking beyond today’s budget announcement, the Pound to New Zealand Dollar exchange rate could also be affected by Thursday’s Bank of England (BoE) meeting.
BoE policymakers are expected to leave interest rates unchanged at 0.75%, but could still influence GBP/NZD movement with their remarks.
The main focus will be on how BoE officials believe that the Brexit process will affect the UK economy – if the outlook is positive, then the Pound could appreciate.
Despite this potential outcome, it is worth noting that talks have still not been concluded ahead of November’s negotiation deadline.
Additionally, if talks do lead to progress and an eventual deal, the UK will be entering the Brexit transitional period in March 2019 which adds another layer of uncertainty.
Australian Dollar to Pound Sterling Exchange Rate Prediction: Are AUD/GBP Gains ahead on Permits Data?
The Australian Dollar (AUD) has steadily risen against the Pound (GBP) since early October and could trade higher on this week’s data.
The first major economic news will be Tuesday’s building permits data for September, which is currently expected to show a significant improvement.
A -9.4% drop in the quantity of permits granted was reported in August, while a 3% rise is anticipated for September.
More building permits being approved implies increased construction sector activity in the future, which might raise AUD trader confidence.
Will AUD/GBP Exchange Rate Drop on Falling Inflation Rates?
Beyond Tuesday’s permits data, the Australian Dollar (AUD) to Pound (GBP) exchange rate could also be affected by Wednesday’s Australian inflation rate figures.
Covering reported price growth in Q3 2018, these readings might lower AUD trader confidence and cause a slight decline against the Pound.
Current expectations are for a slowdown in the pace of year-on-year inflation, with a dip from 2.1% to 1.9%.
Such a shift could unsettle AUD traders, not least because it reduces the chances of a 2019 Reserve Bank of Australia (RBA) interest rate hike.