Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Hits June High after UK Wages Rise

Pound to Australian Dollar (BGP/AUD) Exchange Rate Rising on UK Jobs Data and Trade Jitters

After showing some surprising resilience against a weakened Pound (GBP) last week, the Australian Dollar’s (AUD) continued weakness has made it easier for the Pound to Australian Dollar (GBP/AUD) exchange rate to advance since markets opened yesterday.

Weakness in both the Pound and Australian Dollar left GBP/AUD movement limited last week, with the pair remaining stuck close to AU$1.82.

This week, however, the GBP/AUD interbank level has risen into the region of AU$1.82 and at the time of writing the pair was trending close to its best levels since the end of May.

Broad Australian Dollar weakness on the back of US-China trade jitters prevented the Pound from falling too much yesterday against the ‘Aussie’, and today the pair is benefitting from some stronger-than-expected UK employment data.

Pound (GBP) Exchange Rates Climb on Resilience in UK Job Market

Following Monday’s concerning UK growth report, the Pound (GBP) was able to rebound more easily from lows today thanks to fresh support from the UK’s latest job market data.

This morning’s employment report showed that not only were more new jobs created than expected, but average earnings rose by more than forecast.

Wage growth including bonuses slowed from 3.3% to 3.1% rather than the expected 3.0%, while the figure excluding bonuses unexpectedly rose to 3.4% rather than slowing from 3.3% to 3.1% as expected.

The news bolstered the Pound’s support and made markets more confident that the UK job market remained solid even amid Brexit uncertainty.

Still, the Pound’s potential for gains was ultimately limited, with some commentators warning that the job market’s strength was showing signs of weakness. TUC General Secretary Frances O’Grady also argued that wages weren’t rising fast enough:

‘Wage growth is still stuck in the slow lane. Real pay is still lower than it was before the 2008 crisis and this rate of growth won’t restore decent living standards.’

Australian Dollar (AUD) Remains Unappealing as US-China Trade Fears Persist

Despite some fairly solid Australian business confidence data from the NAB this morning, the Australian Dollar (AUD) has seen poor performance this week so far.

AUD movement was mixed last week, as concerning data limited the currency’s appeal but the US Dollar’s (USD) weakness bolstered support.

This week so far, a lack of data has left the Australian Dollar reacting more to strength in the US Dollar (USD) and global trade sentiment.

Australia is a trade reliant nation, particularly with China, so the Australian Dollar is often correlated to sentiment regarding trade, risk, and China’s economy.

While the US Dollar has been recovering on optimism over trade, US-China trade tensions are still flaring up.

Investors are especially anxious of US-China trade relations ahead of an upcoming G20 summit at the end of the month, when US President Donald Trump is expected to meet China’s President Xi Jinping.

Pound to Australian Dollar (GBP/AUD) Exchange Rate Traders Await Australian Data

The Australian Dollar’s (AUD) movement has been driven mostly by trade tensions and sentiment this week, and some notable upcoming data could shift the direction of the currency’s movement if it surprises investors.

Wednesday’s Asian session will see the publication of Westpac’s June consumer confidence index, followed on Thursday by key May job market report.

Australia’s May job market data could be one of the most influential events of the week for the GBP/AUD exchange rate.

Australia’s job market is pivotal to the Reserve Bank of Australia’s economic outlook. If the job data beats expectations, the ‘Aussie’ could strengthen as interest rate cut expectations fall.

On the other hand, poor jobs data would leave AUD even less appealing and the Pound to Australian Dollar (GBP/AUD) exchange rate could continue to climb for the remainder of the week.

Josh Jeffery

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