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Australian Dollar to Pound Exchange Rate Outlook Unfazed by Australian Job Market Results

Australian Dollar Exchange Rates

Australia’s January Job Data Had Little Impact on Australian Dollar to Pound Exchange Rate

As Australia’s latest ecostats failed to particularly impress investors, the Australian Dollar to Pound (AUD/GBP) exchange rate continued to fluctuate on Thursday.

AUD/GBP hit a new weekly low of 0.5624 during Thursday’s European session as investors bought the Pound (GBP), thanks to higher confidence in the stability of UK Prime Minister Theresa May’s government.

Thursday’s Asian session saw the publication of Australia’s January job market results. The figures largely met expectations and as a result had little impact on the Australian Dollar (AUD) outlook.

The key unemployment rate was forecast to come in at 5.5% – and did. However, the previous figure was revised up to 5.6% which disappointed some investors.

January’s employment change figure was forecast to come in at 15k and printed at 16k. The participation rate also met expectations, slipping from 65.7% to 65.6%.

Pound (GBP) Exchange Rates Edge Higher as Brexit Concerns Lighten

The Pound saw stronger demand during Thursday’s European session, as market concerns surrounding the ongoing and highly uncertain Brexit process lightened slightly.

Investors became a little more confident that the UK and EU would at least be able to agree to a post-Brexit transition period, as reports claimed that a so-classed ‘punishment clause’ had been removed from the latest draft of the transition period agreement.

A previous version of the draft had indicated that if the UK broke EU laws, it could lose access to parts of the EU single market. The current version reportedly references standard EU infringement procedures instead.

Sterling also benefitted from higher market confidence that UK Prime Minister Theresa May’s government was stable, as fears that her position could be undermined by others within the Conservative Party fade.

Australian Dollar (AUD) Exchange Rates Supported by Global Growth Outlook

Demand for the Australian Dollar was slightly stronger following recent US data, despite the data being largely optimistic.

Wednesday’s US Consumer Price Index (CPI) results beat expectations in all major prints and boosted market expectations that the Federal Reserve would hike US interest rates at least three times in 2018.

Following the report however, the US Dollar (USD) remained weak as investors focused more on the increasingly strong global growth outlook rather than the US growth outlook.

With more analysts expecting global growth to continue to improve in 2018, risk-correlated currencies like the Australian Dollar are becoming more appealing.

Australian Dollar to Pound (AUD/GBP) Forecast: UK Data in Focus

As Australia’s economic calendar will be quieter over the coming week, AUD/GBP is more likely to be influenced by global risk-sentiment and the Pound’s movement.

Friday will see the publication of Britain’s January retail sales results, which are forecast to have improved since December. The month-on-month figure is forecast to have risen from -1.5% to 0.5% with the yearly figure predicted to rise from 1.4% to 2.6%.

If UK retail stats beat expectations, it could boost market hopes that British consumers have been resilient in the face of the Brexit process and the ongoing pay squeeze.

However, Sterling’s gains may be limited if Brexit concerns worsen again. Investors are still concerned that UK-EU Brexit negotiations may not succeed which could lead to a ‘hard Brexit’.

Next week will see the publication of many key UK ecostats, including December’s job market report on Wednesday and the latest Q4 2017 Gross Domestic Product (GDP) projections on Thursday.

Australian Dollar investors will be focusing on Tuesday’s Reserve Bank of Australia (RBA) meeting minutes report. Any change in tone from RBA officials is likely to influence AUD/GBP trade, but if the bank continues its usual neutral and cautious tone the ‘Aussie’ may be unfazed.