Pound Australian Dollar (GBP/AUD) Exchange Rate Narrows as UK Labour Market Loosens
The Pound Australian Dollar (GBP/AUD) exchange rate is trading narrowly this morning, as signs of a loosening labour market undermine GBP.
At the time of writing, GBP/AUD is trading at around AU$1.7925, showing little movement from the morning’s opening rates.
Pound (GBP) Undermined by Loosening Labour Market
The Pound (GBP) is struggling for support this morning, as a lack of macroeconomic data leads investors to focus on domestic headlines.
A survey from the Recruitment and Employment Confederation and KPMG found that permanent job placements have fallen. Marking the fifth consecutive decline, the data could point to a loosening in the labour market.
Furthermore, the survey found that wage growth was weakening, coming in at the second-weakest rates in nearly two years.
Victoria Scholar, head of investment at interactive investor, commented:
‘The figure highlights the cautiousness among businesses to hire permanent staff amid the macroeconomic headwinds of slowing growth, a softening consumer, rising interest rates, and inflated costs.’
However, Sterling may be being cushioned by optimism around the waves of industrial action in the country. The RMT union for rail workers suspended upcoming strikes this morning, with an indication that a deal could be soon reached.
Australian Dollar (AUD) Capped by Dovish RBA
The Australian Dollar (AUD) is seeing it’s gains capped this morning. A dovish speech from Reserve Bank of Australia (RBA) Governor Philip Lowe pointed to the possibility of rate hike pauses.
Overnight, Governor Lowe stated that:
‘We also discussed that, with monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy.’
Following this, investors began to reprice their expectations of a higher terminal rate for Australian interest rates. Markets now expect the peak to be 4.10%, versus the bets of 4.35% just a week ago.
However, the risk-sensitive ‘Aussie’ could be underpinned somewhat by a fluctuating market mood this morning.
Pound Australian Dollar (GBP/AUD) Exchange Rate Forecast: Chinese CPI to Dent AUD?
Looking ahead for the Australian Dollar, the ‘Aussie’s status as a Chinese proxy-currency is likely to be the core catalyst of movement.
Overnight tomorrow, China is due to publish it’s latest set of inflation data. With CPI currently forecast to decrease from 2.1% to 1.9%, AUD could weaken as China’s inflation appears to slow. This comes despite relatively optimistic signs from the economic reopening.
However, if China’s CPI data exceeds forecasts, AUD could strengthen as a reflection on the increase in consumption.
For the Pound, the data calendar remains thin ahead of Friday’s GDP release. Because of this, Sterling may remain vulnerable to domestic headwinds.
However, with this morning’s optimism around the train strike negotiations, if a deal between ministers and unions is reached GBP could strengthen.