Stronger Australian Job Participation and Inflation Expectations Boost Australian Dollar to Pound Exchange Rate
Despite the underwhelming Australian wage data earlier in the week, solid Australian job market results on Thursday helped the Australian Dollar to Pound (AUD/GBP) exchange rate hit its best levels all week.
AUD/GBP had been spending most of the week falling due to risk-aversion and Brexit hopes. The pair opened the week at the level of 0.5570 and dipped to a low of 0.5525.
However, on Thursday AUD/GBP put in a solid recovery and during Thursday’s European session the pair touched on a weekly high of 0.5576.
Thanks to Thursday’s Australian data as well as fresh Brexit uncertainties, the Australian Dollar to Pound exchange rate could even see gains this week.
With a lack of notable data due for publication on Friday, late-week AUD/GBP movement could be driven largely by risk-sentiment and Brexit speculation.
Australian Dollar (AUD) Exchange Rates More Appealing as Australian Job Market Outperforms
While Australia’s unemployment rate unexpectedly rose from 5.5% to 5.6% in April, this was largely due to an increase in activity in Australia’s job market. Australia’s participation rate was forecast to remain at 65.5%, but instead climbed to 65.6%.
Thursday’s Australian job market report was actually largely optimistic and made the Australian Dollar (AUD) more appealing towards the end of the week.
Australia’s employment change figure was forecast to come in at 20k but instead jumped to 22.6k, while the full time employment change figure printed a solid 32.7k.
As well as the solid job market results, Australia’s consumer inflation expectations survey from May improved from 3.6% to 3.7%. This indicated to investors that Australian consumers expected Australia’s rate of inflation to continue to climb.
It followed Wednesday’s disappointing Australian wage growth results and consumer confidence figures, which had briefly caused AUD/GBP to trend near weekly lows before its recovery today.
Pound (GBP) Exchange Rates Slip as UK Customs Union Speculation Lightens
During Thursday’s Asian session, a report suggesting that the UK government was planning to keep the UK in an EU customs union beyond 2021 briefly bolstered demand for the Pound (GBP).
However, during the European session new comments reportedly emerged from the UK government denying these plans.
UK Prime Minister Theresa May said:
‘No, we are not [climbing down]. The United Kingdom will be leaving the customs union, we are leaving the European Union. Of course we will be negotiating future customs arrangements with the European Union and I have set three objectives; the government has three objectives in those.’
This caused investors to cut the Pound’s brief rally short, making it easier for the Australian Dollar to Pound (AUD/GBP) exchange rate to briefly rise.
Australian Dollar to Pound (AUD/GBP) Forecast: Major UK Ecostats Next Week
Australian data is unlikely to inspire much Australian Dollar to Pound (AUD/GBP) exchange rate movement in the coming week, as Australia’s economic calendar will be a little quieter.
Australian construction data will be published next Wednesday, followed by leading index data from Westpac on Thursday, but neither of these figures are likely to be hugely influential.
Instead, AUD/GBP trade will be driven by global trade news and risk-sentiment – as well as of course the strength of the Pound.
Comments from Bank of England (BoE) officials, or fresh developments regarding the Brexit process, are likely to drive Sterling before markets close this week.
Failing that though, AUD/GBP trade is likely to focus on major UK ecostats next week.
Wednesday’s European session will see the publication of Britain’s key April inflation results, with retail sales data following on Thursday and growth data on Friday.