GBP/AUD Exchange Rate Trading at Two Week High
The Pound to Australian Dollar (GBP/AUD) exchange rate is trending higher this morning, with some disappointing UK wage figures failing to erase the pairings initial gains.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9463, up around 0.4% from today’s opening levels.
Pound (GBP) Capped by Poor Wage Growth Figures
Whilst the Pound (GBP) is trading higher against the Australian Dollar (AUD) this morning, the currency is struggling to replicate this against its other peers following the publication of the UK’s latest jobs report.
According to data published by the Office for National Statistics (ONS) the UK unemployment rate held at a 44-year low of 3.8% in December as total employment rose to a record high in the latest quarter of 2019.
76.5% of people aged 16 to 64 were in paid work in October to December 2019 💼
This is a record high, 0.4 percentage points higher than the previous quarter and 0.6 percentage points higher than a year earlier 📈 https://t.co/PBXNufA2e3 pic.twitter.com/WxZ2Lzl93t
— Office for National Statistics (ONS) (@ONS) February 18, 2020
However the accompanying earning’s figures fell short of expectations, with wage growth slowing from 3.2% to 2.9% at the end of the year, the slowest pace of expansion in over a year.
While the slowing of wage growth will come as a disappointment to GBP investors it’s not expected to have too greater an impact on consumer spending given that real pay still rose thanks to inflation slumping to a three-year low over the same period.
But GBP investors will remain wary of how today’s data could affect the Bank of England’s (BoE) outlook on monetary policy.
Australian Dollar (AUD) Dented by Dovish RBA Minutes
The Australian Dollar (AUD) is licking its wounds this morning, having slumped in overnight trade following the publication of the minutes from the Reserve Bank of Australia’s (RBA) policy meeting earlier this month.
While the RBA’s February policy statement was largely upbeat in its outlook for the Australian economy, the minutes painted a decidedly more dovish tone, with policymaker signalling their readiness to ease monetary policy if needed.
The RBA has already cut interest rates to a record low of 0.75%, but analysts expect the bank to pursue further cuts this year, particularly as the recent bushfires and coronavirus outbreak in China look set to enact a heavy toll on first quarter growth.
GBP/AUD Forecast: Will a Rebound in Inflation Boost Sterling Sentiment?
Looking ahead, the Pound to Australian Dollar (GBP/AUD) exchange rate may trend higher on Wednesday with the publication of the UK’s consumer price index (CPI).
Economists forecast the latest CPI figures will show inflation accelerated to 1.6% last month, a significant pick-up from the three-year low of 1.3% struck in December.
In the meantime, the release of Australia’s latest wage price index is expected to show that domestic wage growth stalled in the last quarter of 2019, potentially leading to some weakness in the ‘Aussie’ as it keeps the pressure on RBA to ease its monetary policy.