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GBP to AUD Exchange Rate Near Half-Month-Best Ahead of Australian Job Stats

November 13, 2019 - Written by Tim Boyer

Poor UK datasets have not been enough to drag the British Pound to Australian Dollar (GBP/AUD) exchange rate lower, as despite the lack of fresh support for Sterling, the Australian Dollar has been weakened by US-China trade jitters and some underwhelming Australian data. Investors are still hesitant to move too much on the ‘Aussie’ either, amid anticipation for tomorrow’s anticipated Australian job market report.

Strong Australian Dollar performance knocked GBP/AUD down almost a cent from 1.8710 to 1.8626 last week, but this week so far the pair has already recovered those losses and then some.

Earlier today, Australian Dollar weakness helped GBP/AUD to briefly touch on a high of 1.8834, its best levels since the 28th of October. At the time of writing though, GBP/AUD is trending a little lower in the region of 1.8802.

GBP Exchange Rates Benefitting from UK Election Hopes despite Poor UK Data

The Pound has trended with a generally upside bias this week so far, despite typically influential UK ecostats consistently falling short of expectations.

Monday’s UK growth rate, yesterday’s wage and job vacancy stats, and now today’s inflation results, all disappointed expectations and worsened concerns that the Bank of England (BoE) could cut UK interest rates soon.

Britain’s October Consumer Price Index (CPI) inflation rate unexpectedly slowed to just 1.5% year-on-year according to today’s report. The monthly figure contracted more than expected as -0.2%.

According to Howard Archer, Economist at EY Item Club:

‘Inflation dipping more than expected to 1.5% in October will... likely fan expectations that the Bank of England will cut interest rates before too long if the economy fails to pick up from its current struggles,’

However, the Pound continued to trend near its best levels despite this, amid continued hopes that next month’s anticipated UK election could make the chances of a soft Brexit more likely.

Analysts are warning though, that the Pound’s potential for gains is limited as even in this scenario there will be uncertainties on the horizon. According to Derek Halpenny, Head of Research at MUFG:

‘The Pound is likely to remain well supported as long as the political news-flow pointing to a Tory majority continues,

the upside is limited.

There is a price to pay for these gains – a promised short transition period that will weigh on sentiment and with the economy set to weaken further as household spending weakens, pound gains will be contained.’

AUD Exchange Rates Weakened by Combination of Domestic and Global Factors

While the Pound’s movement was more limited today, the Australian Dollar continued to see broad weakness which was one of the primary reasons that the Pound to Australian Dollar exchange rate continued to trend near its best levels.

There were many factors behind the Australian Dollar’s weakness today, including Tuesday evening comments on trade from US President Donald Trump.

Trump said a preliminary US-China trade deal was on the way, but also said China had been ‘cheating’ on trade. This worsened concerns that US-China trade relations could worsen again, which dampened market appeal for the trade-correlated Australian Dollar.

On top of trade jitters, strength in rivals also dampened AUD. The New Zealand Dollar (NZD) surged in reaction to news that the Reserve Bank of New Zealand (RBNZ) had defied expectations and left policy frozen instead of cutting, which left the ‘Aussie’ less appealing.

Lastly, the latest Australian data showed that wage prices were a little weaker than expected year-on-year, which left Australian Dollar investors more anxious ahead of tomorrow’s anticipated Australian job market report.

GBP/AUD Exchange Rate Forecast: Australian Job Stats to Influence RBA Speculation

The Pound has held its ground despite poor UK data, thanks to a combination of UK election hopes and a weaker Australian Dollar.

As the Australian Dollar is weak on a combination of global trade tensions and central bank concerns, upcoming Australian data that could influence central bank speculation could cause GBP/AUD movement in the coming days.

Tomorrow’s Asian session will see the publication of Australia’s anticipated October job market results.

If Australia’s job sector continues to perform strongly, concerns of a more dovish Reserve Bank of Australia (RBA) will soften.

However, poor job data will leave investors anxious that the RBA could become increasingly dovish in the coming months.

UK retail sales stats will be published tomorrow, but the Pound to Australian Dollar exchange rate is more likely to be influenced by UK election news and US-China trade relations.
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