Pound Australian dollar (GBP/AUD) exchange rate remains elevated amid souring trade

Pound Australian dollar (GBP/AUD) exchange rate remains elevated amid souring trade

Article updated: 16:12, 16/05/2024

The pound Australian dollar (GBP/AUD) exchange rate is remaining firm this afternoon, amid a fluctuating market mood.

This is serving to add additional pressure to the ‘Aussie’ due to its acutely risk-sensitive nature.

In tandem with the morning’s disappointing jobs data, AUD is struggling to attract support from investors.

At the time of writing, GBP/AUD is trading at around AU$1.8974, an increase of roughly 0.2% from the morning’s opening rates.

Original article continues below:

Pound Australian dollar (GBP/AUD) exchange rate ticks higher as Australian labour market slows

The pound Australian dollar (GBP/AUD) exchange rate is firming this morning, amid rising Australian unemployment.

At the time of writing, GBP/AUD is trading at around AU$1.8972, an increase of roughly 0.2% from today’s opening rates.

Australian dollar (AUD) dented by rising unemployment

The Australian dollar (AUD) is under pressure this morning, in the wake of the latest Australian employment data.

In April, the unemployment rate leapt higher to 4.1%, up from 3.9% in March. By illustrating signs of increasing slack in the labour market, it is weighing on AUD exchange rates.

Bjorn Jarvis, Head of Labour Statistics at ABS, commented:

‘A 30,000 people increase in unemployment reflected more people without jobs available and looking for work, and also more people than usual indicating that they had a job that they were waiting to start in.’

Increasing unemployment may prevent the Reserve Bank of Australia (RBA) from keeping interest rates elevated. As such, investors are eyeing the potential for interest rate cuts on the horizon, with markets pricing in a 54% chance of a cut in December.

Elsewhere, a mixed market mood is likely applying additional pressure to the ‘Aussie’. As an acutely risk sensitive currency, the wavering mood could be preventing it from recovering any losses.

Pound (GBP) capped by lack of data

Owing to a lack of data, the pound (GBP) is trading in line with market dynamics this morning, along with risk appetite.

Currently, the market mood is wavering between bearish and bullish, which is likely capping Sterling’s gains. As an increasingly risk-sensitive asset, it is unable to firmly press any advantage against its peers.

Additionally, investors may be hesitant to bet on the pound ahead of a speech from Bank of England (BoE) policymaker Megan Greene.

Her speech is expected to be about the UK’s labour market, and may contain hints about the BoE’s path forward. If she continues to advocate for elevated interest rates, GBP could strengthen later today.

Pound Australian dollar exchange rate forecast: BoE Mann speech in focus

Looking ahead for the pound, the core catalyst of movement is likely to be a speech from BoE policymaker Catherine Mann.

As one of the more hawkish members of the Monetary Policy Committee, if she advocates for restrictive policy, GBP could strengthen. However, if she shows a more dovish approach in line with other members, Sterling could dip.

For the Australian dollar, Chinese data is likely to be the primary driver of movement due to its status as a proxy currency.

Tomorrow, the latest retail sales and industrial production data is due for publication. With both forecast to have improved in April, the ‘Aussie’ could rally.

Elsewhere, risk appetite is likely to be an influence on the pairing’s movements in the short term. As a more acutely risk sensitive currency, AUD could gain ground if trading conditions improve.

John Mulcahey

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