Pound to Australian Dollar Exchange Rate Outlook Higher Following UK Jobs Report
After hitting its best levels in a month, the Pound to Australian Dollar (GBP/AUD) exchange rate was able to hold its ground near those highs on Wednesday thanks to a solid UK job market report.
GBP/AUD has climbed from 1.7318 to above 1.7500 this week and briefly touched on a high of 1.7547 on Wednesday morning.
A weaker US Dollar (USD) is making the risky Australian Dollar (AUD) more appealing, but GBP/AUD has avoided losses as the latest UK wage data came in slightly better than expected.
Wednesday morning saw the publication of Britain’s job market data for the three months into November, which saw employment unexpectedly improve by 102k rather than falling -12k as forecast. The unemployment rate remained at 4.3% as expected.
However, perhaps the most impressive part of the report was the news that Britain’s wage rate excluding bonuses had risen from 2.3% to 2.4%, despite being expected to remain at 2.3%. Wages including bonus remained at 2.5% as forecast.
As a result, Sterling (GBP) was an appealing buy on Wednesday. Investors are hoping that if wages continue to beat expectations the Bank of England (BoE) may be pressured into tightening UK monetary policy over the coming year.
Australian Dollar (AUD) Exchange Rates Supported by Westpac’s Leading Index
The Australian Dollar avoided losses against the Pound on Wednesday morning and investors hesitated to drive GBP/AUD to further highs.
As the US Dollar (USD) has become weaker due to uncertainties over US fiscal policy and politics, risky currencies like the Australian Dollar have been seeing stronger demand again.
On top of this the Australian Dollar also benefitted from the latest Australian data.
Wednesday’s Asian session saw the publication of Westpac’s December leading index, which is an indicator of how Australia’s economy is expected to be growing in around half a year.
The six-month annualised index rose from 0.66% in November to 1.41% in December. This indicated that Australia’s growth could grow to over 1% above trend level.
While analysts predict a potential jump in growth could still be limited and temporary, this made the Australian Dollar more appealing on Wednesday.
Pound to Australian Dollar (GBP/AUD) Forecast: Outlook Could Rise if UK Growth Impresses
Despite Britain’s latest wage growth data slightly boosting the Pound outlook and causing fresh speculation that the Bank of England (BoE) could be pressured into taking a hawkish tone on UK monetary policy sooner than expected, GBP/AUD’s gains were limited on Wednesday.
However, with Sterling sentiment still on the rise and more key UK data due at the end of the week, the Pound to Australian Dollar (GBP/AUD) exchange rate outlook could improve further.
Friday will see the publication of Britain’s anticipated Q4 Gross Domestic Product (GDP) projections, which are predicted to remain at 0.4% quarter-on-quarter but slow from 1.7% to 1.4% year-on-year.
If UK growth beats expectations, it will add validity to the recent analyst speculation that Britain’s economy has been more resilient than expected in the face of the Brexit process.
This, coupled with hopes for more BoE hawkishness and a ‘soft’ Brexit, could mean the Pound’s bullish run against the Australian Dollar still has steam left in it.
The Australian Dollar is also unlikely to be particularly strong until next week, amid a lack of notable Australian ecostats due for publication. However, if market demand for risk-correlated currencies rises the ‘Aussie’ could remain appealing regardless.
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