The GBP to AUD exchange rate pushed higher by 0.10 per cent during the Australasian session as investors responded to a below-forecast Australian employment report.
While the Pound broadly strengthened on Wednesday in response to the news that the UK’s unemployment rate had fallen beyond a five-year low, the British asset failed to advance on the ‘Aussie’ or ‘Kiwi’. A risk-on environment buoyed the South Pacific assets and Sterling gains were restrained by unimpressive UK wage growth figures.
However, the GBP to AUD pairing finally recovered a firmer footing on Wednesday as data showed that Australia’s unemployment rate held at 5.8 per cent in May.
Although economists had expected that Australia would add 10,000 positions last month, the nation’s economy actually shed 4,800. April’s employment gain was negatively revised to 10,300.
The participation rate also softened, edging from 64.7 per cent to 64.6 per cent. Economists had forecast no change.
Full-time employment did rise by 22,200 however, while part-time employment slid by 27,000.
This result reflects the comments issued by Reserve Bank of Australia Governor Graeme Wheeler at last week’s policy meeting; ‘There has been some improvement in indicators for the labour market in recent months, but it will probably be some time yet before unemployment declines consistently. Monetary policy remains accommodative.’
After the report was published the Australian Dollar softened against peers like the ‘Greenback’ and Pound. However, the commodity-driven currency did garner some support from the news that the Reserve Bank of New Zealand issued an additional rate increase at its June policy meeting. This is the third time the RBNZ has increased interest rates this year and adds to the case for other developed nation central banks following suit. While the RBA is advocating a steady interest rate policy for the time being, signs of improvement in global growth prospects could prompt a change of heart.
The Australian Dollar pushed beyond 94 cents against the US Dollar in the immediate aftermath of the RBNZ decision.
Meanwhile, the EUR/AUD pairing was able to edge higher during the European session thanks to a better-than-expected industrial production report for the Eurozone. The level of industrial output in the 18-nation currency bloc was shown to have increased by 0.8 per cent in April, month-on-month, rather than the 0.5 per cent expected. However, March’s figure was negatively revised to a decline of 0.4 per cent.
As UK data is lacking today, the Pound to Australian Dollar pairing is likely to continue trading in its current range in the hours ahead, although the US advance retail sales report could trigger market movement.
Before the weekend the Pound to Australian Dollar exchange rate could be affected by China’s industrial production/retail sales figures and UK construction output data.
Update: Pound to Australian Dollar (GBP/AUD) Exchange Rate stronger
The Pound made solid gains against the Australian Dollar and the majority of its most traded peers following comments made by Bank of England Governor Mark Carney which hinted that the Central Bank plans to raise interest rates by the end of this year.
In a speech given at the Mansion House in the city of London financial district yesterday, Mr Carney said that the UK economy was still facing risks such as a heating up housing market and strengthening Pound.
What got the markets excited however was when he said; “There’s already great speculation about the exact timing of the first rake hike and this decision is becoming more balanced. It could happen sooner than markets currently expect.”
As a result of his comments the GBP/AUD rose by 0.31% to 1.8053
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar, 0.9398,
Australian Dollar,,Euro, 0.6944,
Australian Dollar,,Pound, 0.5583,
Australian Dollar,,New Zealand Dollar, 1.0844,
US Dollar,,Australian Dollar, 1.0648,
Euro,,Australian Dollar, 1.4397,
Pound Sterling,,Australian Dollar, 1.7915,
New Zealand Dollar,,Australian Dollar, 0.9227,
[/table]
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