GBP/AUD Exchange Rate Firms as Australian Outlook Darkens
The Pound Australian Dollar (GBP/AUD) exchange rate firmed overnight following the release of weak Australian data.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9296, up approximately 0.2% this morning’s opening rate.
Australian Dollar (AUD) Slumps on Business Sentiment Data
The Australian Dollar (AUD) is facing headwinds this morning in the wake of disappointing Australian data.
The Westpac consumer confidence index fell by 2.6% November, reversing the 2.9% rise we saw in October. Further denting AUD overnight was the National Australia Bank’s (NAB) Business Confidence report, as October’s index slipped back into negative territory at -2.
The souring economic outlook serves to pressure the ‘Aussie’ today, as slipping Australian confidence leads investors towards the Australian Dollar’s stronger peers.
Alan Oster, Chief Economist at NAB noted:
‘Business conditions remain healthy, picking up in October and still well above average. Still, business confidence remained soft in the month, still well below average at -2 index points. Businesses clearly remain cautious about the outlook for the economy despite the resilience we are seeing’.
Declines in both consumer and business confidence may undermine AUD as the European session continues. With no further data due for the remainder of the day, the risk-sensitive ‘Aussie’ may be vulnerable to market volatility in the interim.
Pound (GBP) Ticks Up following Jobs Data
The Pound (GBP) is drifting higher against most of its peers today, following the latest UK employment data.
Signs of a resilient labour market look to be supporting the Pound today. Unemployment in September came in lower-than-forecast, holding steady at 4.2%. While wage growth edged down slightly from August’s reports, it remained strong at 7.7%, coming in as forecast.
Martin Beck, Chief Economic Advisor to the EY ITEM Club commented:
‘The latest labour market release signalled a stable UK jobs market. The jobless rate was unchanged from Q2 to Q3 and while pay growth slowed a little, it was still strong by past standards.’
Sterling’s modest wins may continue to keep GBP afloat for the remainder of the session, ahead of key inflation data due out tomorrow.
Pound Australian Dollar Exchange Rate Forecast:
Looking forward, the UK’s latest inflation data is due on Wednesday, and is likely to drive GBP volatility. A forecast cooling to 4.8% in October’s headline inflation reading is likely to support recent speculations that the Bank of England (BoE) is done raising interest rates, which may dent GBP.
Looking to Australia, the latest jobs report is due on Thursday. A forecast increase in unemployment in October may dent the ‘Aussie’.
On Friday, the UK’s retail sales data is forecast to report a 0.3% rebound in sales growth. Increased consumer activity in the retail sector could offer Sterling some support by quelling recent UK recession fears.