Pound Australian dollar (GBP/AUD) ticks up amid UK employment release
The pound Australian dollar (GBP/AUD) exchange rate is edging higher this morning following the latest batch of UK employment data.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9655, virtually unchanged from this morning’s opening rate.
Pound (GBP) buoyed by upbeat jobs data
The pound (GBP) initially strengthened this morning following the UK’s latest employment release.
The data revealed that UK unemployment fell in July to 4.1% as forecast, falling from multi-month highs reached earlier in the year.
Meanwhile, the latest average earnings data deviated slightly from forecasts. Average earnings including bonuses eased in the three months to July, from an upwardly revised 4.6% to 4%, falling below projections of 4.1%. Meanwhile, wage growth excluding bonuses slipped from 5.4% to 5.1% as forecast during the same period.
Stubborn wage growth has caused concerns for Bank of England (BoE) policymakers in recent months, due to worries that inflated UK earnings could serve to keep wider price pressures elevated, thereby hampering the bank’s disinflation process.
Liz McKeown, Director of Economic Statistics at the ONS said:
‘Growth in total pay has slowed markedly again as one-off payments made to many public sector workers in June and July last year continue to affect the figures.
‘Basic pay growth also continued to slow, though less sharply.’
As a result, GBP’s upside may remain somewhat limited today, amid renewed speculation that the bank could deliver a more aggressive policy-easing cycle than previously expected in the near term.
Australian dollar (AUD) pressured by waning business morale
The Australian dollar is facing headwinds this morning in the wake of some downbeat domestic consumer and business confidence figures.
Australia’s NAB business confidence index unexpectedly fell from 1 to -4 in August, missing forecasts of a rise to 3.
Meanwhile, Westpac’s latest consumer confidence index slipped by 0.5% from 85 to 84.6 last month, printing slightly above market forecasts of 84, pointing to the sixth decline this year.
Westpac commented:
‘The pessimism that has dominated for over two years now is still showing no real signs of lifting.
While cost-of-living pressures are becoming a little less intense and fears of further interest rate rises have eased, consumers are becoming more concerned about where the economy may be headed and what this could mean for jobs.’
However, an improving market mood overnight cushioned AUD’s downside, leaving the ‘Aussie’ with only limited losses today.
Pound Australian dollar exchange rate forecast: RBA speech in focus
Looking ahead, Reserve Bank of Australia Assistant Governor Sarah Hunter is due to speak overnight. Any hawkish commentary could boost the ‘Aussie’, reinforcing RBA rate hike bets.
Looking to the UK, the latest GDP figures are due for release tomorrow morning. Economists expect to see 0.2% growth in July, which could bolster GBP exchange rates.