Pound Australian dollar exchange rate surges as investors favour safe assets
The pound Australian dollar (GBP/AUD) exchange rate is climbing higher, as market volatility outweighs this morning’s notable macroeconomic releases.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9391, up approximately 0.4% from this morning’s opening rate.
Australian dollar (AUD) slumps despite Chinese resilience
The Australian dollar is extending its recent losses this morning despite news that the Chinese economy has expanded this year.
China’s GDP printed at 1.6% for the first quarter of 2024, increasing form an upwardly revised 1.2% in the fourth quarter of last year.
China’s National Bureau of Statistics said:
‘Generally speaking, in the first quarter, the national economy made a good start with positive factors amassing, laying a strong foundation for achieving the annual development targets.’
However, despite AUD’s status as a proxy currency for the Chinese economy, the upbeat reading offers the highly risk-sensitive ‘Aussie’ little support this morning amid a spell of firmly downbeat trade.
Pound (GBP) mixed following employment uptick
The pound (GBP) is trading without a clear direction against most of its major rivals following the latest UK jobs data.
In February, the UK’s unemployment rate leapt to 4.2%, surpassing market expectations of a milder uptick to 4% and rising from the previous month’s 3.9%. Meanwhile, average earnings in the three months prior to February 2024 cooled more-than-forecast to 6%.
Markets are deliberating whether renewed signs of a loosening UK labour market could encourage the Bank of England (BoE) to promptly begin its unwinding cycle.
Yael Selfin, Chief Economist at KPMG UK, observed that the latest ONS data further paves the way for summer rate cuts by the BoE:
‘The slight easing in regular pay growth will bring some comfort for the Bank of England which has relied on the pay data as a key gauge of domestic inflationary pressure. Moreover, the rise in unemployment rate paints a picture of a less tight labour market.’
While gloomy trade buoys GBP against its riskier peers, Sterling may otherwise remain subdued ahead of tomorrow’s high impact inflation report.
Pound Australian Dollar exchange rate forecast: AU trade data to sink the ‘Aussie’?
Coming up, the UK’s latest inflation data is due for release tomorrow morning. Economists expect headline inflation to have eased in March to 3.1%, notably cooling from 3.4% in the month prior. Similarly, core inflation is set to fall to 4.1%, from 4.5% in February.
Should the data print as forecast, rapidly falling UK inflation could cement market speculations of a June interest rate cut by the BoE, sinking GBP.
A lack of notable Australian releases in the coming days could see the increasingly risk-sensitive ‘Aussie’ left vulnerable to market risk dynamics amid escalating geopolitical tensions. Because of this, a continued move towards safe-haven currencies could see AUD plummet against its safer rivals. Alternatively, cheery trading conditions could see anxious investors favour the ‘Aussie, allowing the acutely risk-sensitive currency to take precedent.