Pound Australian dollar (GBP/AUD) exchange rate muted despite several upbeat data releases
The pound Australian dollar (GBP/AUD) exchange rate is trapped in a narrow range this morning following the publication of the UK’s latest jobs data alongside Australia’s consumer and business confidence indices.
At the time of writing the GBP/AUD exchange rate is trading at $1.9394, virtually unchanged from this morning’s opening rate.
Pound (GBP) supported by UK labour data
The pound (GBP) is enjoying some modest support this morning following the publication of the UK’s latest jobs report.
The Office for National Statistics (ONS) reported that unemployment unexpectedly fell from a previous reading of 4.4% down to 4.2%, rather than rising to 4.5% as expected.
Further underpinning Sterling sentiment this morning is the UK’s latest wage growth data, which showed that average earnings (excluding bonuses) fell from 5.8% to 5.4% rather than a more severe 4.6% prediction.
The upbeat labour data has served to undermine Bank of England (BoE) interest rate cut bets for the second half of the year, bolstering GBP exchange rates as a result.
Rob Morgan, Chief Investment Analyst at Wealth Manager Charles Stanley, commented:
‘Today’s job numbers have all but ended hopes of a further interest rate cut for a few months. Wage inflation is a key number to help the BoE assess how quickly it should cut interest rates as it’s a significant component of services sector prices.’
Australian dollar (AUD) strengthens despite mixed data
The Australian dollar (AUD) is climbing against the majority of its peers this morning following the publication of a duo of impactful data releases.
The latest Westpac consumer confidence index exceeded expectations in August, with the index rising from 82.7 to 85, ahead of a more modest 83 estimate.
This month’s index marked the highest reading in a six-month period and confirmed a stark rebound in consumer sentiment.
Westpac Senior Economist Matthew Hassan commented:
‘Consumers breathed a small sigh of relief in August as the RBA Board left interest rates unchanged and the support coming from tax cuts and other fiscal measures became more apparent.’
However, the latest NAB business confidence survey surprised to the downside, with the index falling from a six-month high of 3 down to 1, rather than rising to 5 as expected.
Despite the juxtaposing data releases, the ‘Aussie’ is managing to catch bids this morning, as the risk-sensitive currency is further bolstered by this mooring’s risk-on mood.
GBP/AUD exchange rate forecast: UK inflation in the spotlight
Looking ahead to tomorrow, the primary diver of movement for the pound Australian dollar exchange rate will likely be the publication of the UK’s latest inflation data.
With headline inflation expected to increase while core inflation is forecast to cool, will a mixed reading further muddy the waters surrounding the future of monetary policy this year?
Turning to the Australian dollar, economic releases will be absent from the data calendar until Thursday, which will see the publication of Australia’s latest consumer inflation expectations.
Will an expected downturn in inflation expectations be enough to hobble AUD? Or will upbeat trade continue to lift the acutely risk-sensitive ‘Aussie’?