GBP/AUD exchange rate makes tentative gains
The pound Australian dollar (GBP/AUD) exchange rate is trading in a mixed range this morning having earlier reached a one-month peak. Markets may be on edge ahead of the release of US jobs data.
At the time of writing, GBP/AUD is trading at A$1.9555, virtually unchanged from yesterday’s levels.
Pound (GBP) trades mixed following release of housing data
The pound (GBP) is trading narrowly against its peers so far today, making marginal gains in several exchange rates. This morning’s house price data may be responsible for the currency’s slight uptick.
According to the survey conducted by Halifax and the Bank of Scotland, house prices increased by 0.3% in August, and by 4.3% on the year. This marks the fastest annual increase since November 2022.
Analysts’ response to the release is broadly positive: Amanda Bryden, head of mortgages at Halifax, said that ‘Recent price rises build on a largely positive summer for the UK housing market. Prospective homebuyers are feeling more confident thanks to easing interest rates.’
Capping gains for Sterling, however, may be a cautious market mood as traders await this afternoon’s nonfarm payrolls data from the USA. The release is a significant employment indicator and is likely to influence the monetary policy outlook of the Federal Reserve bank.
The pound has benefitted in recent weeks from the Bank of England’s (BoE) comparatively hawkish interest rate stance, however, if this afternoon’s release demonstrates lower-than-expected US unemployment the Fed may strike a bold tone, boosting the US dollar (USD) and undermining GBP tailwinds.
Australian dollar (AUD) wavers following week of mixed data
The Australian dollar (AUD) is trading in a mixed range against its peers today as investors digest this week’s data.
Alternately upbeat and disappointing data from China weighed upon the ‘Aussie’ in recent days: over the weekend, China’s manufacturing PMI for August indicated the sharpest contraction in factory activity in six months.
Subsequently, however, manufacturing activity in the private sector was shown to have increased, potentially capping headwinds for both the Chinese yuan (CNY) and the Australian dollar.
This morning, Australia’s housing data exceeded forecasts, which may be lending further support to the Antipodean currency. In July 2024, the value of new home loans rose by 2.9% month-on-month to a two-year peak of A$18.88bn; the purchase of newly erected dwellings rebounded strongly alongside sales of existing dwellings.
Oxford Economics Australia senior economist Maree Kilroy remarks that Australia’s tight rental market and higher gross unit rental yields were helping to stoke investor demand, while Australian Bureau of Statistics (ABS) head of finance statistics Mish Tan confirmed:
‘Investors have continued to see the largest growth in new loans over the past year, increasing more than a third in value since July 2023.’
GBP/AUD exchange rate forecast: US data to trigger volatility?
The pound Australian dollar exchange rate is likely to trade this afternoon upon US nonfarm payrolls data, given the widespread impact the release is likely to have across the currency market.
If US unemployment eases as expected, the Federal Reserve may be persuaded to enact a smaller interest rate cut this month. However, deeper-than-forecast joblessness could solidify expectations of a 50bps cut.
If the Fed is considered likely to take a dovish stance, other central banks – including the BoE and the Reserve Bank of Australia (RBA) – will be cast in a hawkish light, lending possible tailwinds to both currencies.