GBP/AUD Exchange Rate Edges Higher as RBA Rate Cut Odds Rise
The Pound Australian Dollar (GBP/AUD) exchange rate rose by 0.7% today, with the pairing currently trading around AU$ 1.948 after Australia’s unemployment shot up to 5.3% in January, leaving ‘Aussie’ investors jittery on the prospect of another interest rate cut from the Reserve Bank of Australia (RBA).
Robert Thompson, a Macro Rates Strategist at Capital Markets, commented:
‘We continue to look for further easing from the RBA in June this year, but with the risk that this slips into the second half of 2020 as the Bank looks through a likely weak raft of first-quarter data on the grounds that current noise from bushfires [and the] coronavirus will reverse and should be looked through.’
Today also saw Australia’s employment change report for January, which fell from 28.7 thousand to 13.5 thousand and further increased the odds of an RBA rate cut.
The risk-correlated Australian Dollar (AUD) continues to struggle from flagging market demand due to China’s ongoing coronavirus epidemic.
GBP/AUD Exchange Rate Rises as UK Retail Sales Beat Forecasts in January
The Pound (GBP) rose against the ‘Aussie’ following today’s release of January’s retail sales report, which showed a better-than-expected rise from -0.5% to 0.9%, adding to optimism over the British economy following yesterday’s six-month high inflation figure.
Analysts at Reuters commented:
‘British shoppers started spending again at the start of this year after a very sluggish end to 2019, adding to signs that improved sentiment since December’s election is translating into stronger economic activity.’
Brexit developments have persisted to hold back some of Sterling’s gains against some of its peers, however, after it was revealed that David Frost, the UK’s Chief Brexit negotiator, was seeking no alignment with the EU going forward.
With fears rising over whether the UK will be able to secure a trade deal with the EU, market appetite for Sterling remains unsteady as Britain’s economic outlook continues to remain uncertain.
GBP/AUD Outlook: UK Markit Services PMI in Focus
Pound (GBP) investors will be looking ahead to tomorrow’s flash Markit Services PMI report. Any signs of improvement in the UK’s largest sector would prove GBP-positive.
Tomorrow will also see the release of the UK’s Markit Manufacturing PMI for February, which is forecast to fall into contraction territory at 49.7.
Meanwhile, Australian Dollar (AUD) investors will be keeping a close eye on China’s coronavirus epidemic, with any signs of it easing boosting the risk-sensitive ‘Aussie’.
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TAGS: Australian Dollar Forecasts Pound Australian Dollar Forecasts