Steady UK Employment Shores up Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate
As the UK labour market continued to show signs of tightening in the three months to December this encouraged the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate to push higher.
Although the headline unemployment rate remained steady at 4% a positive employment change figure gave investors fresh cause for confidence.
The latest average weekly earnings data also gave Pound Sterling (GBP) a boost, with wages continuing to solidly outpace inflationary pressure at the end of 2018.
With inflation weakening further in recent months this improved the chances of wage growth continuing to accelerate in the months ahead.
Even though UK business confidence showed fresh signs of deterioration, with Brexit-based uncertainty still weighing on sentiment, this was not enough to prevent the GBP/AUD exchange rate making gains.
Neutral RBA Message Leaves Australian Dollar (AUD) on Back Foot
The release of February’s Reserve Bank of Australia (RBA) meeting minutes left the Australian Dollar (AUD) exposed to fresh downside pressure, meanwhile.
While policymakers still expressed some optimism in the economic outlook the general message of the minutes still shifted towards a neutral stance.
This suggests that the RBA may leave interest rates on hold for longer, with the odds of an interest rate hike looking increasingly distant in 2019.
As Monday’s bout of market risk appetite started to fade, in spite of continued hopes of a breakthrough in US-China trade talks, this encouraged additional Australian Dollar selling.
Another weak showing from January’s Westpac leading index could see AUD exchange rates shed further ground on Tuesday night.
Weaker Australian Unemployment to Dent Australian Dollar (AUD) Exchange Rates
Confidence in the Australian Dollar may deteriorate further if labour market data fails to impress on Thursday.
Any signs of a loosening labour market could weigh heavily on AUD exchange rates, as any rise in unemployment would encourage additional RBA caution.
Unless full time employment picks up on the month in January the mood towards the Australian Dollar looks set to sour.
If the latest round of US-China trade talks result in concrete progress, however, this could put a dampener on the GBP/AUD exchange rate.
Market risk appetite may give the Australian Dollar support over the coming days, provided signs point towards a healthier global economy.
AUD exchange rates look vulnerable, however, if tensions between the US and China appear to mount once again.
Demand for the Pound, meanwhile, could weaken on the back of UK public sector net borrowing data.
An increase in government borrowing, pushing up the budget deficit, would give investors fresh cause for concern over the outlook of the UK economy.
Political developments may also provoke GBP exchange rate jitters in the days ahead, with worries over Brexit unlikely to ease as the March deadline approaches.