This week: GBPAUD to recover from below 1.90 psychological mark?

With the Reserve Bank of Australia (RBA) and the Bank of England (BOE) set for their respective policy meetings, no surprise that the forecasted one-week volatility for GBPAUD has risen
to a 4-month high.

Note: this FX pair recently broke below the psychological 1.90 mark for the first time since January.

Bloomberg’s FX forecast model is predicting a 75% chance that GBPAUD will trade within
the 1.8765 – 1.9191 range this week.

Depending on what the RBA and the BOE convey about their respective rates outlook, that could determine whether GBPUAD will enter the weekend above or below 1.9000.
 

Events Watchlist:
 

• Tuesday, May 7: Reserve Bank of Australia (RBA) policy decision

AUD has been climbing as markets forecast a 78% chance that the RBA will hike by 25 basis points in September 2024, due to still-sticky inflation.

If the RBA this week pushes back against such rate-hike expectations, that may force GBPAUD to move upwards and back into the 1.900 – 1.950 range it adhered to for most of this year.
 

• Thursday, May 9: Bank of England (BOE) rate decision

Just like the RBA, the BOE is not expected to adjust its benchmark rates this week. However, markets are of the opinion that the UK’s first rate cut of this cycle will arrive by August 2024, with the second perhaps before year-end.

Stronger hints of incoming BOE rate cuts may weaken GBP and drag GBPAUD to a fresh 4-month low.
 

• Friday, May 10: UK 1Q GDP, March industrial production and trade balance

Although GDP is expected to rebound in Q1, industrial production may have slumped for March 2024.

Still, a stronger-than-expected showing by the UK economy which dilutes the need for as many BOE rate cuts for the year may in turn help GBPAUD bulls’ near-term fortunes and restore this FX pair back above the 1.900 mark.

Here’s a comprehensive list of other key economic data and events due this week:
 

Monday, 6th May

• CNY: China Caixin services PMI
   
• EUR: HCOB Services PMI (final)
   
• CHF: SNB President Thomas Jordan speech
   
• USD: Fed Barkin speech, Fed Williams speech
   

Tuesday, 7th May

• AUD: RBA rate decision
   
• EUR: Germany balance of trade
   
• EUR: EU retail sales
   
• CAD: Ivey PMI s.a.
   
• USD: Fed Kashkari speech
   

Wednesday, 8th May

• Crude: API Crude oil stock change
   
• EUR: Germany industrial production
   
• Crude: EIA Crude oil stocks change
   
• USD: Fed Jefferson speech, Fed Cook speech
   

Thursday, 9th May  

• JPY: BoJ summary of opinions
   
• CNY: China balance of trade
   
• GBP: BoE rate decision, BoE Governor Bailey speech
   
• USD: US initial jobless claims
   

Friday, 10th May

• JPY: Japan current account
   
• GBP: UK GDP, Industrial production, Manufacturing production
   
• CAD: Canada unemployment
   
• EUR: ECB Monetary policy meetings accounts
   
• USD: Michigan consumer sentiment, Fed Goolsbee speech, Fed Barr Speech