Yesterday (Tuesday 12th) saw the release of the UK’s latest labour figures. Both the UK and interacting currencies were hoping for positive results in an attempt to give them a much-needed boost in the market. However, as the figures were released today some have described them as ‘unimpressive’.
GBP Slumps as Figures Underwhelm
Many were hoping that yesterday’s labour figures from the Office for National Statistics (ONS) were going to be promising. The unemployment rate provided a good response with a fall from 3.9% to 3.8% in September. This matches the 44-year low observed earlier in the year and beat expectations that predicted the figure to remain steady. Wage growth figures on the other hand were not as impressive, with average earnings declining from 3.7% to 3.6%.
The results were not terrible by a long shot, but it did resemble the slowest pace of wage growth in the past 4 months and given a recent fall in vacancies, it may be a sign that the UK’s labour market is slightly degrading. As a result, feelings toward the GBP were pessimistic and this showed in the GBP rate taking a slight hit.
AUD Still Clings on to Hope of a Trade War Deal
The AUD continues to keep a close eye on the events surrounding the US-China trade talks. With remarks coming from Donald Trump a few days earlier denying agreeing to tariff rollbacks, the advancements in the deal were showing signs of slowing. The market will have kept tabs on the president at last night’s appearance at the New York Economic Club. Given his unpredictability, investors in the AUD will be looking to see what unfolds.
Economists Predict Pressure on the GBPAUD Exchange Rate in Upcoming Days
As we roll into the second half of the week, attention turns to the upcoming consumer price index (CPI) data from the UK. Analysts have revealed that it is likely that the CPI figures will highlight a slowing in the UK inflation from 1.7% to 1.6%, its lowest level since December 2016. This is likely to increase the chance of the Bank of England cutting interest rates in 2020.
Equally, AUD investors will be anticipating results from Australia’s quarterly wage price index which was released overnight. Should the wage growth slow it is likely to put pressure on the AUD and increase the chances of the Reserve Bank of Australia cutting their interest rates also.
If you are in the process of buying or selling Australian dollars and would like a free quote then contact me directly, Tom Holian, I look forward to hearing from you. [email protected]