Pound Australian dollar (GBP/AUD) exchange rate ticks higher despite falling AU unemployment
The pound Australian dollar (GBP/AUD) exchange rate is firming this morning, despite falling unemployment in Australia.
At the time of writing, GBP/AUD is trading at around AU$1.9244, an increase of roughly 0.2% from today’s opening rates.
Australian dollar (AUD) wavers despite robust employment data
The Australian dollar (AUD) is softening this morning, despite signs of a strong Australian labour market.
In May, the unemployment rate fell from April’s reading of 4.1% down to 4%. This was accompanied by a rise in the number of employed individuals across the country.
However, AUD seems unable to capitalise on this data due to fading expectations of an interest rate cut this year. The Reserve Bank of Australia (RBA) is no longer expected to cut rates in 2024, with signs of resilient employment doing little to alter this perception.
Additionally, while the data shows that unemployment has decreased, the Australian employment market remains fairly tepid.
Robert Carnell, Regional Head of Asia-Pacific Research at ING, explained:
‘In short, having hit a soft-patch at the end of 2023, the Australian labour market is currently ticking along at a modest pace. It wouldn’t take a lot to tip it into a weaker trajectory, but equally, there is also some potential for upside and the net picture is more positive than negative.’
Elsewhere, a mixed market mood is likely further weighing down the ‘Aussie’. As the antipodean currency is acutely sensitive to risk, the unsteady tone may be capping its upside.
Pound (GBP) listless amid lack of data
The pound (GBP) is trading without a clear trajectory this morning, amid a lack of impactful domestic data releases.
This is leaving the increasingly risk-sensitive Sterling exposed to shifts in risk appetite. With the market mood currently in flux, GBP is unable to catch bids from investors as they favour safer assets.
However, this is likely allowing the pound to remain afloat against more risk sensitive assets, such as AUD.
Furthermore, yesterday’s UK GDP data and further analysis could be serving to cushion the pound. Although the UK economy is on a knife edge, some investors have noted that UK growth is improving on aggregate, brightening the outlook.
Pound Australian dollar exchange rate forecast: Australian consumer confidence in focus
Looking ahead for the Australian dollar, the core catalyst of movement is likely to be the latest Westpac consumer confidence data.
The release was delayed from today, and is expected to show a small decrease in sentiment in June.
This could dampen the ‘Aussie’ as it may indicate decreased consumer optimism, which may filter through to falling spending.
Weak consumer spending could have a negative impact on the Australian economy, as retail plays a vital role.
For the pound, domestic data releases are thin on the ground through to the end of the week. This is likely to keep Sterling muted, unless there is a significant shift in risk appetite.
As an increasingly risk-sensitive currency, a shift to bearish trade could weaken Sterling against safer assets.