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GBP/AUD Forecast: Pound to Australian Dollar Exchange Rate Higher Despite Strong Australian Jobs

February 18, 2021 - Written by Ben Hughes

Despite some of today’s key Australian job market stats beating forecasts, the British Pound to Australian Dollar (GBP/AUD) exchange rate is climbing again today. The Pound continues to capitalise on coronavirus recovery hopes, and its appeal has been extended by strong UK data published in recent sessions. Unless there is a shift in direction from tomorrow’s data, the pair could be in for another week of gains.

Last week actually saw resilience in the Australian Dollar and GBP/AUD slipped lower from the level of 1.7890 to 1.7853 throughout the week. However, GBP/AUD movement has been more bullish instead this week as the Pound once again jumps on market optimism.

At the time of writing on Thursday, GBP/AUD is trending in the region of 1.7920 - above last week’s opening levels.

Pound Sterling (GBP) Exchange Rates Remain Appealing as Speculation Rises that UK Could Ease Restrictions

The Pound has been one of the most consistently and broadly appealing currencies in recent weeks. That trend is continuing this week.

Sterling is benefitting from weakness in the Australian Dollar today which is helping GBP/AUD to gain more than last week, though the reasons for the Pound’s strength are largely the same.

Britain’s coronavirus vaccine rollout is still ahead of other major economies. The UK has reached its target of having 15 million people receiving at least one vaccine dosage by the 15th of February, which is making investors more optimistic about the potential of lockdown being eased soon.

According to David Madden, Market Analyst at CMC Markets UK:

‘The update triggered chatter that Britain could ease up on some of its restrictions in the next few weeks, so that contributed to the wider view the global economy will recover from the pandemic in the months ahead.’

Yohay Elam, Analyst at FXStreet, said:

‘UK COVID-19 statistics continue falling sharply, raising expectations for a rapid reopening of the economy. Pressures are mounting on Prime Minister Boris Johnson to enable the economy to pick up, also as Britain's vaccination campaign is nearing a quarter of the population – the highest percentage in a large country.’

Sterling’s appeal found a boost in this week’s UK data so far as well. Yesterday’s UK inflation rate results were stronger than expected. Analysts reacted to the report by saying that UK inflation could be in for even stronger rises in the coming months.

Australian Dollar (AUD) Exchange Rates Lack Drive despite Some Forecast-Beating Job Stats

The Australian Dollar’s movement remains mixed this week. While the currency has been attempting to recover in recent weeks, the Reserve Bank of Australia’s (RBA) sudden quantitative easing (QE) expansion still weighs on the AUD outlook.

Australia’s latest job market report beat expectations in some key prints, but this was not enough to considerably boost Australian Dollar support either.

Australia’s key job change report beat expectations, printing at 59k, while the key unemployment rate unexpectedly improved to 6.4%.

However, despite these stronger than expected stats, Australia’s participation rate unexpectedly fell. This was part of what caused the unemployment rate to fall, so it likely weighed on market optimism around the report.

According to Andrew Boak, Goldman Sachs Group’s Chief Economist for Australia:

‘We expect robust jobs growth to continue in 2021, although we are mindful of risks around the termination of Australia’s JobKeeper wage subsidy in March and note overall unemployment is likely to remain well above levels consistent with ‘full employment’ and faster wages growth,’

GBP/AUD Exchange Rate Forecast: Retail Sales Could Cause Late-Week Movement Shift

The Pound to Australian Dollar exchange rate is climbing today, but movement remains volatile as the Australian Dollar may attempt recovery again soon.

Friday will see the publication of key January retail sales results from both Australia and the UK. They will give investors a much better idea of how these economies are weathering the coronavirus pandemic this year so far.

If the Australian retail report beats forecasts, it could prove to be the boost AUD needs to mount a stronger recovery against the Pound.

On the other hand though, strong UK retail and PMI results could boost confidence that Britain’s economy is weathering its third national lockdown.

This would make investors even more confident that Britain will recover from the coronavirus pandemic.

Of course, any more developments in the coronavirus or vaccine situations will continue to influence the Pound to Australian Dollar (GBP/AUD) exchange rate as well.
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