Fears of a Reserve Bank of Australia (RBA) interest rate cut continue to weigh on the ‘Aussie’ (AUD) today, shoring up the GBP/AUD exchange rate.
Pound (GBP) Advanced on 7-Year Low Unemployment Rate, ‘Aussie’ (AUD) Positive in spite of Weak Australian Data
Wednesday’s raft of UK employment data provided a strong rallying point for the Pound (GBP), in spite of the Jobless Claims Change figure printing at a decidedly worse level than anticipated. The ILO Unemployment Rate unexpectedly fell to 5.4%, the lowest reading in seven years, as Average Weekly Earnings continued to advance, albeit slightly slower than forecast. Potentially raising pressure on the Bank of England (BoE) to raise interest rates sooner rather than later, this saw the appeal of Sterling surge through the day to take the GBP/AUD exchange rate to a weekly best of 2.1298.
Although the ‘Aussie’ (AUD) was initially dealt a blow by the release of the September Australian Employment Change figure, which was revealed to have fallen significantly beyond forecast to -5,100, the antipodean currency recovered some of its earlier steam thanks to weak US data. As US Advance Retail Sales proved disappointing the odds of a 2015 interest rate rise from the Fed continued to diminish, boosting emerging-market and commodity-correlated currencies.
Stronger than Expected US Inflation Reading sends ‘Aussie’ (AUD) on Downtrend as RBA Interest Rate Cut Speculation Rises
Sentiment towards the ‘Aussie’ has soured somewhat on Friday, however, after the US Consumer Price Index proved to be slightly less dovish than anticipated. Inflation failed to turn negative in September, although it did remain flat on the previous year, which led some hawks to raise hopes of a nearer-term Fed rate hike. This reassurance in the relative strength of the world’s largest economy helped to push the antipodean currency into a downturn, as the prospect of a Reserve Bank of Australia (RBA) rate cut remains a concern.
BoE Monetary Policy Committee (MPC) member Kristin Forbes has made relatively hawkish comments today, indicating that the threat of global slowdown was not quite as severe as traders have made out. Suggesting that Forbes could soon begin voting in favour of a domestic interest rate rise, in line with persistent hawk Ian McCafferty, this shored up the Pound somewhat to extend its gains against the ‘Aussie’.
GBP/AUD Exchange Rate Forecast: Upcoming Chinese GDP Could Turn ‘Aussie’ Bearish
Monday’s release of third quarter Chinese GDP could push the antipodean currency down further, particularly as it is expected to print weaker at 6.8% as opposed to 7.0% in the second quarter. The meeting minutes for the October RBA Rate Decision could also trigger some volatility for the GBP/AUD exchange rate, with the tone of policymakers likely to have a strong influence on the appeal of the ‘Aussie’.
The UK’s Rightmove House Prices and Public Sector Net Borrowing figures may provide a stronger rallying point for Sterling, especially if government debt is shown to have narrowed after the previous month’s unexpectedly substantial increase.
Current GBP, AUD Exchange Rates
At time of writing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was making gains in the region of 2.1254, with the Australian Dollar to Pound Sterling (AUD/GBP) pairing on a downtrend at 0.4704.
Comments are closed.