(Updated 15:45, 18/04/24) The pound Australian dollar exchange rate continued to trade without a clear direction as the session progressed.
An ongoing lack of data throughout the remainder of the day saw the currency pairing left vulnerable to a shifting market sentiment.
The focus moving forward is the latest UK retail sales data. Could a slight upturn in consumer activity lift GBP against its rivals?
Otherwise, with AU data in short supply, the ‘Aussie’ could strengthen amid an increasingly upbeat market sentiment.
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Pound Australian dollar exchange rate subdued following AU jobs data
The Pound Australian dollar (GBP/AUD) exchange rate is trading sideways today amid weak AU jobs data and shifting Bank of England (BoE) interest rate cut speculations.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9341, virtually unchanged from this morning’s opening rate.
Australian dollar (AUD) edges higher as employment data beats forecasts
The Australian dollar (AUD) is climbing higher this morning amid slightly better-than-expected employment figures.
The domestic unemployment rate rose to 3.8% in March, up from the previous month’s 3.7% and below market expectations of 3.9%.
While the data suggests that Australian unemployment may continue to trend higher in the coming months, the lower-than-forecast reading saw AUD garner investor interest overnight.
Bjorn Jarvis, Head of Labour Statistics at ABS, said:
‘The small drop in employment in March followed a larger-than-usual flow of people into employment in February… However, in March, the flows into employment had returned to a more usual pattern. The labour market remained relatively tight in March.’
The Reserve Bank of Australia (RBA) enacted its third consecutive interest rate hold, keeping rates at 4.35% in March, amid confidence that the labour sector would continue to weaken.
Because of this, a tighter-than-anticipated labour market last month could see markets slightly defer their interest rate cut expectations as the session progresses.
Pound (GBP) subdued following BoE comments
The pound (GBP) is mostly subdued this morning amid a lack of fresh UK releases, having retreated from yesterday’s brief winning streak.
With the UK’s CPI easing less than expected yesterday a slight pullback in BoE interest rate cut speculations allowed Sterling to post some modest gains.
However, dovish rhetoric from the central bank last night then offset these gains, as policymakers shrugged off the data’s slight deviation from forecasts.
Speaking at a conference in Washington last night, BoE Governor Andrew Bailey affirmed that the central bank’s interest rate decisions would be largely influenced by the health of the labour market, service sector inflation and domestic pay growth.
Bailey said:
‘We are pretty much on track with where we thought we would be – a bit under in February and a bit over in the latest figures. Next month will see quite a strong drop. It looks like we are getting a loosening of the labour market.’
Bailey’s suggestion that the UK would likely see a ‘strong drop’ in inflation in April, further paved the way for June interest rate cuts.
Pound Australian dollar exchange rate forecast: UK retail sales to lift Sterling?
Looking ahead, the UK’s latest retail data is due to print tomorrow morning. Economists expect to see 0.3% growth in retail sales in March, following a flatline in consumer spending last month. Should the data print as forecast, GBP could attract investor interest amid signs of revived consumer activity.
For the ‘Aussie’, a data-light end to the week may see the acutely risk-sensitive currency driven primarily by market risk dynamics. Escalating geopolitical tensions may continue to drive anxious investors towards riskier assets, which could see AUD strengthen.