GBP/AUD Exchange Rate Slides on Positive Australian Employment Figures
The Pound Australian Dollar (GBP AUD) exchange rate is under pressure this morning as Australia’s latest employment figures buoy AUD.
At the time of writing the GBP AUD exchange rate is trading at around AU$1.8564. Down roughly 0.4% from this morning’s opening levels.
Australian Dollar (AUD) Strengthens on Upbeat Jobs Data
The Australian Dollar (AUD) is in a strong position this morning as AUD investors respond to Australia’s latest jobs report.
According to data published by the Australian Bureau of Statistics, domestic unemployment fell from 3.7% to 3.6% last month, beating forecasts it would remain on hold.
Unemployment rate falls to 3.6% in Mayhttps://t.co/Oi0R2yt1mU pic.twitter.com/wqcP8u0eFa
— Australian Bureau of Statistics (@ABSStats) June 15, 2023
Even more impressive however was the number of jobs that the Australian economy added in May. An increase of 75,900 smashed forecasts for a more modest 15,000 rise.
Australia’s upbeat employment figures lent considerable support to AUD exchange rates as it tipped the odds for another rate hike from the Reserve Bank of Australia’s (RBA) in July above 50%.
Sean Langcake, Head of Macroeconomic Forecasting for Oxford Economics Australia, comments:
‘The RBA has maintained a hawkish tone following the June rate rise, expressing concerns over the persistence of underlying inflation. These data will do nothing to allay those concerns.’
Australia’s impressive jobs report also helped the ‘Aussie’ to reverse some of the losses seen late on Wednesday. After a hawkish rate pause from the Federal Reserve revived the US Dollar (USD) and weakened market risk appetite.
Pound (GBP) Underpinned by BoE Rate Hike Bets
While the Pound Australian Dollar exchange rate is currently trading on the defensive, elsewhere the Pound (GBP) is holding its ground.
Sterling sentiment continues to be underpinned by expectations the Bank of England (BoE) will need to continue to raise interest rates in the coming months.
These expectations have been reinforced by comments from former BoE Governor Mark Carney. Who suggested interest rate will remain high for years.
In an interview on ITV’s Peston show, Carney suggested:
‘One of the things that governments in the UK, and Canada, elsewhere have to get used to, now, is that they are going to be paying higher rates of interest for their debt for the foreseeable future.
‘Not just measured in 12 months, 24 months, but actually, the big techtonic shifts in the global economy mean that we are likely to have higher longer-term interest rates for a period.’
Pound Australian Dollar Forecast: Waning Risk Appetite to Dent AUD?
UK and Australian economic data is thin on the ground through the remainder of the week. As a result, movement in the Pound Australian Dollar exchange rate is likely to be linked primarily to risk sentiment.
This may leave the ‘Aussie’ to relinquish ground as the prospect of more rate hikes from the major central banks is likely to weaken global growth prospects.
Meanwhile, any further downside in the Pound looks highly limited so long as BoE rate hike bets remain elevated.