Update: Pound to Australian Dollar Rate Bounces Higher
The interbank GBP/AUD exchange rate was able to rally to AU$1.7393 overnight after the release of disappointing wage figures for Australia.
Wage growth rose just 0.5% in the third quarter QoQ and 2.0% on the year – less than the 2.2% increase expected.
However, Sterling’s rally proved short lived and GBP/AUD later moved away from its best levels in response to the UK’s own mixed jobs data.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has struggled so far this week thanks to UK political uncertainty and an underwhelming British inflation report.
Pound Sterling Exchange Rates Slide on Below-Forecast UK Inflation
It’s been a rocky couple of days for the Pound to Australian Dollar exchange rate, with the pairing fluctuating by 2 cents in response to UK political jitters and lacklustre UK data.
After Monday’s politics-related selloff, the Pound extended losses on the news that British inflation hadn’t risen to a five-year high.
The UK Consumer Price Index (CPI) was forecast to rise from 3% to 3.1% year-on-year and slip from 0.3% to 0.2% month-on-month, but the figures came in at 3% and 0.1% respectively.
This result is unlikely to push the Bank of England (BoE) into adopting a more aggressive stance on interest rates.
Some analysts, such as Chris Williamson from IHS Markit, believe the report indicates that price pressures have peaked.
Australian Dollar Forecast Supported by Rising Business Confidence
The Australian Dollar has failed to take advantage of the Pound’s weakness amid reduced demand for higher-risk assets.
Still, AUD was modestly bolstered by an improvement in business confidence.
Tuesday’s Asian session saw the publication of October’s National Australia Bank (NAB) business confidence survey, which improved from 7 to 8.
This figure indicated that businesses were seeing the best conditions in around two decades amid surging sales and profits.
The report also reflected recent comments from Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle, who said that business investment in Australia was helping to strengthen non-mining sectors in the country.
However, the Australian Dollar’s strength has been limited by the RBA’s recent assurance that interest rates are unlikely to rise for some time to come.
GBP AUD Forecast: Employment Stats in Focus
Wednesday and Thursday will see the publication of key jobs data from Britain and Australia, and both reports could have a notable influence on the Pound to Australian Dollar exchange rate.
Perhaps the biggest potential influence for GBP AUD in the coming days will be Australia’s Q3 wage growth results, due during Wednesday’s Asian session.
The Reserve Bank of Australia (RBA) has repeated concerns about Australian wages in recent months and stagnant earnings are seen as one of the primary reasons for the bank’s cautious monetary policy outlook.
Australian wages are forecast to have risen from 0.5% to 0.7% quarter-on-quarter, and from 1.9% to 2.2% year-on-year.
If the wage data comes in at or above expected levels, the Australian Dollar could rally.
UK wage data is expected to show stagnant average earnings – a result which may undermine Sterling.
Data Affecting This Week’s GBP/AUD Exchange Rate Forecast
15th November AUD Westpac Consumer Confidence Index (NOV)
15th November AUD Wage Price Index (YoY) (Q3)
15th November GBP Unemployment Rate (SEP)
15th November GBP Average Earnings excl. Bonus (SEP)
15th November GBP Claimant Count Change (OCT)
16th November AUD Employment Change (OCT)
16th November GBP Retail Sales (YoY) (OCT)