March 15, 2017 - Written by James Fuller
STORY LINK GBP AUD Exchange Rate Rises as UK Unemployment Hits Lowest Level Since 1975
The British Pound to Australian Dollar exchange rate surged on Thursday afternoon following the Bank of England’s (BoE) March policy decision due to hawkish action from one member of the Monetary Policy Committee (MPC).
Kristin Forbes voted to hike UK interest rates back up to 0.5%. While policy was left frozen, this impressed traders as it was the first time any BoE policymaker had voted for a rate hike since January 2016.
[Previously updated 11:00 am)
Australia’s unemployment rate unexpectedly leapt in February, climbing from 5.7% to 5.9% as a substantial number of part-time jobs were lost.
Even so, the volatile nature of the report and the corresponding shift back towards full-time employment saw the Pound to Australian Dollar exchange rate struggling to make any gains as a result.
[Previously updated 15/03/2017]
GBP Dented against AUD after Sharp Wage Growth Slowdown
The GBP AUD exchange rate has remained positive today, despite January’s jobs figures showing a larger-than-expected slowdown in average earnings.
More supportive has been January’s unemployment rate, which has dropped from 4.8% to 4.7%. As the lowest level of unemployment since 1975, this figure could boost trader confidence as Brexit gets underway later this month.
GBP Forecast to Worsen against AUD if BoE Turns Dovish
Near the end of a dramatic week for UK developments, the Pound may fall against the Australian Dollar depending on how Thursday’s Bank of England (BoE) event transpires.
The BoE is expected to leave interest rates at 0.25% again, meaning the greater source of movement may be any comments from BoE Governor Mark Carney.
If Article 50 had been triggered by now, Carney would likely have had some choice forecasts for the UK economy under Brexit negotiations; as is, the Governor can only repeat his prior cautious outlook on the UK economy, which is unlikely to reassure investors.
The BoE may otherwise be in the spotlight if Carney announces a replacement for newly-resigned Assistant Governor Charlotte Hogg. If a respected and ‘safe’ candidate is put forward then the Pound may appreciate, though the odds of finding a substitute at such short notice are slim.
AUD GBP Softens on Marginal Confidence Gain
The Australian Dollar has dropped by -0.3% against the Pound today, given that the latest confidence figures have showed a sharp slowdown in confidence growth.
While technically a positive result, the fact that Westpac confidence scores for March have only increased by 0.1% compared to a prior 2.3% has been no cause for major optimism.
Elsewhere, new vehicle sales have fallen in February, showing contraction of over -2.7% on the month and the year.
AUD Advance Predicted if Employment Stats Beat Forecasts
The Australian Dollar is likely to accelerate against the Pound on Thursday if AU data proves supportive; the main focus will be on jobs figures in February.
Although the unemployment rate is forecast to stagnate at 5.7%, expectations are for a rise in employed persons to 16k.
While a relatively minor improvement, the employment change could still end up boosting the AUD if it shows more jobs gained than forecast.
Elsewhere, the Reserve Bank of Australia (RBA) minutes for March are also due; if it looks like the RBA has a positive outlook then the AUD could be further boosted.
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