Foreign Currency Market Update – GBP / AUD Update
The past week has seen the Pound Sterling to Australian Dollar exchange rate trending within the range of 2.1260 to 2.1567.
In a volatile week, employment data played a key role. Pound Sterling made temporary gains on Wednesday after UK unemployment fell by 0.1%, with 177k new jobs created in Q3 of 2015. Although weekly earnings disappointed the mixed jobs data was enough to see some positive movement for the British asset.
Any gains were quickly lost, however, as superb Australian labour market data saw the GBP/AUD exchange rate plummet. After experiencing a -0.8k shrink in the number of jobs in September, this month’s job figures leapt past the forecast 15.0k, with 58.6k jobs created in October. On top of this, unemployment fell by 0.3% to 5.9% instead of holding steady as expected. The data saw the ‘Aussie’ gain more than 1% against the Pound.
The strong ‘Aussie’ performance saw the GBP/AUD exchange rate drop to a low of 2.1260.
Pound Sterling was able to regain some ground on Thursday as positive US Advance Retail Sales figures slowed the progress of the ‘Aussie’. While the sales data did not meet forecast levels, the US data still printed positively and supported US rate hike bets, weakening the Australian Dollar to the benefit of Pound Sterling.
The start of this week saw the ‘Aussie’ making gains, although trading has been volatile. The Pound Sterling has been held back by the continuing fears over a UK housing bubble, with the Rightmove House Price index showing a YoY rise of 6.2%, despite MoM prices falling -1.3%. However many experts claim that the overinflated London market is skewing the results.
The GBP/AUD exchange rate trended between 2.1309 and 2.1478 on Monday.
The rest of the week promises the release of a lot of UK and US data which could help to push the GBP/AUD exchange rate up, with little Australian data to provide opposition. It is likely that the ‘Aussie’ will continue to benefit from trader profit taking on the US Dollar. The release of optimistic minutes from the Reserve Bank of Australia (RBA) meeting on the 3rd November has also helped and the Conference Board Leading Index and Westpac Leading Index are due out during today’s Australian session.
The US Consumer Price Index has almost guaranteed that the Federal Reserve will vote to raise interest rates in December, so the US Dollar is likely to strengthen ahead of the next Federal Open Market Committee (FOMC) policy meeting.
Thursday’s London session will see the release of UK YoY Retail Sales figures, which are expected to print at 3.9%, down from the previous figure of 5.9%. US unemployment data and UK public sector borrowing figures could also impact the GBP/AUD. There’s only so long that positive employment data can buoy up the ‘Aussie’ before the reality of a strong US Dollar sets in.
The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 2.1358.
Heads Up
Summary of major upcoming data releases that we think may move the market.