‘Aussie’ (AUD) Shored up as Australian Unemployment Rate Holds Steady, Pound (GBP) Weak ahead of BoE Meeting
Last night’s Australian unemployment data proved decidedly better than pundits had been expecting, with the Unemployment Rate steady at 5.8% and a decrease of 1,000 rather than 10,000 in employee numbers. With sentiment towards the Pound (GBP) rather muted ahead of the Bank of England (BoE) policy meeting the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trending lower at 2.0754 this morning.
Earlier…
With the Pound (GBP) still weakened as a result of discouraging UK production output figures the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has remained bearish on the back of increasing risk appetite.
Slowing UK Industrial Production Softened Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate
Traders saw little incentive to buy into Pound Sterling (GBP) yesterday after the latest UK Industrial Production figures proved decidedly more disappointing than expected. Output weakened substantially on the year from 1.7% to 0.9% as Manufacturing Production contracted severely by -1.2% rather than the forecast -0.8%. This suggested that the impact of slowing global demand on the UK economy had been more severe than pundits had previously thought, spurring the Pound into a marked slump across the board.
Although the afternoon’s NIESR Gross Domestic Product Estimate was rather more optimistic, this was ultimately not enough to return the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate to an uptrend for long.
Dovish FOMC Comments Shored up Australian Dollar (AUD) Today after Chinese Exports Strengthened
Market risk aversion has largely eased on Wednesday thanks to an unexpectedly strong set of Chinese trading data, which saw base metal prices shored up from their recent lows. China’s trade surplus defied predictions to widen from 54.1 billion to 60.0 billion US Dollars (USD) in December, with exports surprisingly returning to a state of growth. Although this dramatic turnaround has been viewed with some measure of suspicion the Australian Dollar (AUD) has nevertheless been bolstered against rivals today.
Confidence in the ‘Aussie’ has also been reassured as a result of more dovish comments from members of the Federal Open Market Committee (FOMC) that have suggested a more gradual path of US interest rate hikes. As the strengthening of the ‘Greenback’ is expected to put greater downwards pressure on the commodity-correlated Australian Dollar this has helped boost the appeal of the antipodean currency further this afternoon.
GBP/AUD Exchange Rate Forecast: BoE Rate Decision Predicted to Provoke Pound Volatility
Tomorrow’s Australian unemployment data could seriously dent demand for the ‘Aussie’, however, if the number of those in employment falls as forecast. The Unemployment Rate is expected to show an uptick in December, from 5.8% to 5.9%, erasing some of the impact of November’s unexpectedly bullish leap in employment.
The Pound may remain bearish, though, as the first Bank of England (BoE) interest rate decision of 2016 is likely to see little change in policymaker sentiment. Should members of the Monetary Policy Committee (MPC) remain more dovish with regards to the likelihood of a nearer-term rate hike the GBP/AUD exchange rate could retreat further.
Current GBP, AUD Exchange Rates
At the time of writing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending lower at 2.0627, while the Australian Dollar to Pound Sterling (AUD/GBP) pairing was making gains around 0.4846.
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