Pound Australian Dollar (GBP/AUD) Fluctuates amid Resilience of UK Economy
(Updated 12/7/23, 09:00)
The Pound Australian Dollar (GBP/AUD) exchange rate is wavering this morning amid the latest Financial Stability Report from the Bank of England (BoE). Despite warnings of further financial stress to both consumers and firms, the UK economy remains resilient as banks pass stress test.
At time of writing, the GBP/AUD exchange rate is around $1.9343, relatively unchanged from this morning’s opening levels.
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GBP/AUD Surges on Further Tightening Expectations from BoE
(Updated 11/7/23, 16:45)
The Pound Australian Dollar exchange rate is continuing to hold its ground after stronger-than-expected wage growth in the UK. Despite some signs that that the labour market is cooling, accelerating wage growth could see the BoE continue its relentless rate hikes, bolstering Sterling.
At time of writing, the GBP/AUD exchange rate is around $1.9363, a 0.53% climb from this morning’s opening levels.
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GBP/AUD Rallies on Added Rate Hike Pressure
The Pound Australian Dollar exchange rate is climbing as UK wages increased faster-than-expected, bolstering rate hike bets from the BoE.
At time of writing, the GBP/AUD exchange rate is around $1.9377, a 0.58% jump from this morning’s opening levels.
Pound (GBP) Rallies on Joint Highest Wage Growth
The Pound (GBP) is finding some renewed demand on stronger-than-expected wage data. However, an uptick in unemployment could be capping any further gains. Despite higher-than-expected unemployment rate and slowing jobs growth, expectations of further tightening will be needed to counteract strong pay pressure.
The Office for National Statistics (ONS) published the latest employment data this morning, with investors focusing on the alarming wage growth. Earnings picked up 7.3% in the three months to May compared to last year, as private sector growth saw the biggest rise in growth with 7.7%.
Both BoE Governor Andrew Bailey and Chancellor Jeremy Hunt called for further wage restraint to bring inflation back down. With the labour market remaining very tight, expectations of further tightening from the central bank buoyed GBP investors. Mel Stride, Work and Pensions Minister, reiterated the need to bring wage inflation down:
‘What is really important, just as the Bank of England is doing its bit on the monetary side with higher interest rates that the government does the right thing with fiscal policy to accommodate that.
‘And that does mean leaning into controlling wage growth wherever possible, principally in the public sector.’
Australian Dollar (AUD) Softening Despite Upbeat Data
Meanwhile, the Australian Dollar (AUD) is struggling for demand against many of its peers today despite a flurry of positive news. Better-than-expected consumer and business confidence wasn’t enough to cheer investors as concerns linger around global economic growth.
The latest Westpac consumer confidence and NAB business confidence showed a surprise uptick in both measures, but the latter still reports signs of uncertainty in the Australia economy. Alan Oster, NAB chief economist, commented on the data:
‘We continue to see warning signs in the survey about the outlook for growth but as of June firms were yet to see a real deterioration.’.
Pound Australian Dollar Exchange Rate Forecast: RBA Speech to Boost the Aussie?
Looking ahead, the Pound Australian Dollar exchange rate could see further movement with a speech from RBA Governor Philip Lowe. With Australia’s labour market appearing to be getting tighter, hints at further rate hikes could boost the ‘Aussie’.
Meanwhile, the Pound will be left to trade on market sentiment as investors continue to digest the latest labour market data. Despite a climb in unemployment, record-high wage growth is unlikely to deter the BoE from its tightening cycle, potentially keeping the Pound supported.