Pound Australian Dollar (GBP/AUD) Exchange Rate Jumps as Australian Jobs Data Disappoints
Fresh signs of weakness from the Australian labour market encouraged the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate to make solid gains this morning.
A -6.7% decline in the ANZ job advertisements data suggests that job growth continued to slow in the final month of December.
Given the Reserve Bank of Australia’s (RBA) lingering concern over the stubbornly high unemployment rate this deterioration suggests that employment numbers are unlikely to improve in the near term.
As long as the Australian labour market fails to show evidence of tightening the risk of greater RBA dovishness looks set to weigh on the Australian Dollar (AUD).
Return of MPs Raises Risk of Brexit Volatility for Pound Sterling
Support for Pound Sterling (GBP) remained relatively muted, meanwhile, as investors lacked any fresh UK data to move on.
As MPs return from their Christmas break today, however, the potential for increased GBP exchange rate volatility looks set to grow.
While some of the uncertainty over Brexit receded in the wake of December’s general election result it remains unclear exactly what the future relationship between the UK and EU will look like.
Worries persist over the ability to conclude negotiations in time for the December 2020 deadline, keeping the risk of a cliff-edge exit alive to the detriment of the Pound.
Signs of Weakening Australian Trade Set to Weigh on AUD Exchange Rates
Further volatility looks likely for the Australian Dollar on the back of Thursday’s trade figures, with forecasts pointing towards a narrowed trade surplus.
Evidence that the global trade slowdown increasingly weighed on the Australian economy in November could drag AUD exchange rates lower across the board.
However, after the -5% contraction in export volumes seen in October the Australian Dollar could benefit from any substantial rebound in export activity.
Even if a rise in exports fails to widen the monthly trade surplus this may still offer a boost to the antipodean currency, in spite of lingering worries over the ultimate impact of the recent deterioration of US-Iran relations.
An uptick in the Chinese consumer price index could also encourage the Australian Dollar to pick up, with markets looking for reassurance over the health of the world’s second largest economy.
Pound Jitters Forecast on Latest Comments from BoE Governor Carney
While fresh UK economic data remains thin on the ground this week this may not be enough to limit the upside potential of the GBP/AUD exchange rate.
Comments from Bank of England (BoE) Governor Mark Carney could drive the Pound lower if he expresses greater signs of caution over the UK’s economic outlook.
Although Carney’s remaining time at the BoE is now limited his comments could still discourage investors as the risk of a possible interest rate cut lingers.
Unless Carney indicates a more hawkish outlook the GBP/AUD exchange rate may struggle to hold onto its positive trend on Thursday.