Faster Pace of UK GDP Growth could Push GBP/AUD Exchange Rate Higher
The Pound (GBP) has risen by 0.5% against the Australian Dollar (AUD) today, thanks to rumours of a UK-EU customs union deal being agreed.
Downing Street has dismissed such reports as speculation, but the Pound has still traded higher against the Australian Dollar regardless.
As further proof of Pound Sterling’s resilience today, the Pound has also appreciated despite a larger-than-expected UK services sector slowdown.
Looking ahead, the Pound might be able to trade higher against the Australian Dollar when Friday’s UK GDP data comes out.
Covering reported Q3 economic activity, the reading is expected to show a rise for the annual and quarterly results.
Faster GDP growth bodes well for future economic stability, so the Pound could trade higher against the Australian Dollar on such news.
GBP/AUD Outlook: Will UK Production Data Limit Pound Sterling Movement?
Also out on the coming Friday will be a number of UK production data releases, covering industrial, construction and manufacturing output.
Construction activity is tipped to rise by 1.1%, but elsewhere a slowdown in industrial and annual manufacturing production levels has been forecast.
Slower output could limit the positive effects of faster UK GDP growth, potentially reining in any GBP/AUD exchange rate gains seen before the weekend.
Is Australian Dollar to Pound (AUD/GBP) Exchange Rate Turbulence ahead on RBA Rate Decision?
For Australian Dollar (AUD) traders, the next economic event to watch out for will be Tuesday’s Reserve Bank of Australia (RBA) interest rate decision.
RBA policymakers aren’t expected to adjust rates from 1.5%, but could still boost demand for the Australian Dollar if they reveal a positive economic outlook.
The best-case scenario for AUD traders will be if policymakers support a potential interest rate hike in 2019.
While some economists believe that this is unlikely, even the hint of higher interest rates could be enough to boost the AUD/GBP exchange rate.
Limited wage growth and high household debt are blamed for the RBA’s previous caution; if the bank’s outlook has improved then the AUD could trade higher.
Australian Construction Sector Growth could Boost AUD/GBP Exchange Rate
Tuesday will also bring a measure of Australian construction sector activity, which could support the Australian Dollar to Pound exchange rate.
Covering reported activity in October, the AIG construction index is tipped to rise from 49.3 points to 50.1.
Although a minor increase on the face of it, such a rise would indicate that the sector has shifted from contraction to growth.
Any reading above 50 points shows sector expansion, so an AUD/GBP exchange rate rise on the news is entirely possible.