The British Pound to Australian Dollar (GBP/AUD) exchange rate has seen significant gains over the past week, but the pair has finally cooled after yesterday’s volatile movement thanks to some strong Australian data. As Australia’s latest job market report was strong, it helped the Australian Dollar to rebound from its recent lows.
Since opening this week at the level of 1.8925, GBP/AUD has spent most of the week climbing. GBP/AUD gained significantly from Monday through Wednesday, briefly touching on a high of 1.9219 yesterday. This was the best level for the pair in over a month, since mid-December.
However, during today’s Asian session the Australian Dollar experienced a jump in demand that pulled GBP/AUD lower by almost a cent. At the time of writing on Thursday, GBP/AUD sustains most of this week’s gains but still trends below the week’s best levels, in the region of 1.9110.
Following days of poor performance from the Australian Dollar, investors bought the currency back from its lows today.
The Australian Dollar rebounded strongly from its cheapest levels in reaction to a surprisingly strong Australian job market report published during today’s Asian session.
Australia’s December unemployment rate unexpectedly improved from 5.2% to 5.1%. A greater than expected employment change figure was also reported.
The data bolstered market hopes that the Reserve Bank of Australia (RBA) would not be pressured into cutting Australian interest rates in February. With RBA interest rate cut bets fading, the Australian Dollar saw a jump in demand.
However, the Australian Dollar’s rebound was ultimately relatively limited. Investors are hesitant to buy the ‘Aussie’ too much due to risk-sentiment. The risk-correlated Australian Dollar is less appealing amid global market concerns about a coronavirus spreading in China.
As a result of other pressures remaining on the Australian Dollar, the Pound has been able to sustain most of this week’s impressive gains.
While Sterling’s movement is a little more subdued today, it has been able to hold most of the impressive gains it saw earlier in the week.
A combination of this week’s better than expected UK data and lightening Bank of England (BoE) interest rate cut bets are making investors more optimistic about the Pound outlook.
However, there could be further sharp movements in the Pound to Australian Dollar exchange rate before markets close for the week.
Tomorrow will see the publication of some of this week’s most influential UK ecostats, which could be especially influential for Bank of England interest rate speculation.
UK PMI projections for January will give investors a better idea of how Britain’s economy is performing this year so far. If the data falls well short, it could cause hopes of a 2020 economic rebound to weaken, BoE rate cut bets could rise and the Pound may fall back again.
On the other hand, stronger PMIs would boost hopes for Britain’s economic activity to improve this year and give the Pound a solid boost in demand.
Australian PMI projections from CommBank will also be published tomorrow. If Australian data impresses or global risk-sentiment improves, the Pound to Australian Dollar exchange rate could be pushed lower.