The Pound to Australian Dollar exchange rate has been slowly creeping upwards this week, following an ease in tensions regarding Brexit on the UK side and a lack of important data that is likely to rock the AUD.

One of the few important data releases expected to affect the Australian Dollar this week is inflation data. This is due to be released in the early hours of Wednesday morning UK time. Although inflation data is set to show a healthy increase to 2.0% year on year from 1.9%, and an even healthier jump from 0.2% to 0.8% from the previous quarter, this is unlikely to move the pair that drastically. The chances of an Australian interest rate hike have been put firmly to bed and the Reserve Bank of Australia are in no rush to raise interest rates due to an extremely strong AUD at present. As the Australian economy is reliant on exports of raw materials to its largest trading partner, China, the strong AUD has started to have a negative effect on the export industry.

A hawkish US Federal Reserve is potentially negative for the Australian Dollar

The AUD has been benefitting as a high rewarding currency so far this year for traders that have been putting their funds in the AUD due to the high interest rates. However, a hawkish Federal Reserve could spell further weakness for the AUD. As the Fed are expected to raise US interest rates again before the end of the year, the US Dollar will soon be offering similarly high interest rates, which means that investors are likely to move funds out from the Australian Dollar and into the US Dollar, which is considered a safe-haven currency.