GBP/AUD Exchange Rate Dips Despite Robust UK Employment Data
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate stuck a new six-month low this morning as rising UK wage growth failed to offset the negative sentiment surrounding Sterling.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.7727, leaving the pairing around two cents down from this week’s open rate.
Positive Wage Growth Fails to Support the Pound (GBP)
The Pound (GBP) is on the back foot against the Australian Dollar (AUD) and the majority of its other peers this morning, in spite of a robust UK jobs report.
According to data published by the Office for National Statistics (ONS), UK unemployment held at a 44-year low of 3.8% in May, while UK wage growth (excluding bonuses) climbed to a new decade high of 3.6%.
However, it appears this wasn’t enough to inspire investors to take out any bullish bets on the Pound, which continues to be waylaid by rising Brexit anxiety and growing expectations that the Bank of England (BoE) will ease monetary policy this year.
Australian Dollar (AUD) Gains Trimmed by Dovish RBA Minutes
Meanwhile, whilst the Australian Dollar (AUD) is climbing against the Pound (GBP) this morning, it is struggling to find momentum in wider trade, following the publication of the minutes from the Reserve Bank of Australia’s (RBA) policy meeting earlier this month.
After cutting interest rates for a second time in as many months, the minutes were unsurprisingly viewed as dovish, with the bank continuing to focus on the slack in the labour market, with the bank hinting at the possibility of further rate cuts if the situation doesn’t improve.
Giving their verdict on the minutes Analysts at ANZ bank, said:
‘In terms of further rate cuts, given the labour market was once again cited as the driver for this rate cut, any further deterioration in the coming months to the unemployment rate will likely lead to further easing. Indeed, lack of progress to the downside may trigger further cuts.’
This unsurprisingly dented the appeal of the Australian Dollar this morning as it left markets wary of the prospect of further cuts.
GBP/AUD Exchange Rate Forecast: Muted Inflation to Offer Limited Support to Sterling?
Looking ahead, movement in the Pound Australian Dollar (GBP/AUD) exchange rate in the mid-week is likely to be driven by the release of the UK’s latest CPI figures.
Economists forecast the data will show that inflation in the UK held steady at 2% in June, holding just within the BoE target range.
However, with the BoE widely expected to follow other central banks in easing its monetary policy this year, we expect any upside from the robust inflation figures to be limited.
Meanwhile, the focus for AUD investors will be the release of Australia’s own jobs report overnight on Wednesday.
This could see the Australian Dollar move lower in the latter half of the week if employment growth slowed in line with expectations last month as it will likely keep the pressure on the RBA to potentially cut rates again this year.