Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Jumps as Employment Data Impresses
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate rallied on Tuesday morning, leaving the pairing trading at around AU$ 1.9022.
Data revealed that jobs growth in the UK was the strongest in close to a year in the three months to November.
This buoyed GBP as it could ease growing concerns the Bank of England (BoE) has about the extent of a slowdown in the British labour market.
At the end of the year, signs of weakness within the labour market caused two BoE board members to vote in favour of a rate cut, and Governor Mark Carney stated further stimulus for the economy would be needed.
The Office for National Statistics (ONS) showed the number of people in employment rose to 32.9 million, buoying Sterling.
The ONS also reported that total earnings growth rose by 3.2% annually, however this was the same as the three months to October and the slowest since September 2018.
Commenting on wage growth, ONS statistician David Freeman noted:
‘While pay growth has eased since last summer, with inflation remaining subdued, earnings are continuing to increase in real terms.’
Australian Dollar (AUD) Falls as Chinese Coronavirus Concerns Mount
Markets took a hit this morning over mounting concerns about a new strain of coronavirus that has hit China.
The Chinese authorities confirmed the virus could be spread through human contact and a fourth person had died.
The risk-sensitive ‘Aussie’ remained under pressure as investors were reminded of the economic impact of the SARS virus in 2002-3. Added to this, the Lunar New Year holidays increased the threat of contagion with hundreds of millions set to travel.
Commenting on this, TD Securities’ Head of Emerging Markets Strategy, Cristian Maggio said:
‘I’m not an expert in the pandemics, but you can look at previous examples like the SARs outbreak which also originated from Asia.’
Maggio also added that China originally downplayed this outbreak and ‘I think the market might be fearing something similar.’
Pound Australian Dollar Outlook: Weak Employment Data to Weigh on AUD
Looking ahead to this evening, the Australian Dollar (AUD) could continue to retreat against the Pound (GBP) following Westpac’s consumer confidence data.
If consumer confidence slumps further than expected in January, it is likely ‘Aussie’ sentiment will remain under pressure.
Thursday could see AUD slide further against Sterling following the release of December’s Australian labour market data.
If data reveals the Australian unemployment rate has moved further from the Reserve Bank of Australia’s (RBA) target, the Pound Australian Dollar (GBP/AUD) exchange rate is likely to rally.
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TAGS: Pound Australian Dollar Forecasts