The British pound rallied through the 1.9500 figure yesterday after strong employment numbers from the UK gave the economy another post-Brexit boost.
UK Employment at a Record High
The 180,000 gain in employment was stronger than the 170,000 estimate and the unemployment rate stayed at the forecast 3.8% level. The surge in jobs resulted in the highest figure on record and saw a strong rise in women in full-time work.
One downside to the release was a continued stall in wage growth, slowing from 3.2% in December to 2.9%. Despite this, the jobless rate is at the lowest rate since 1975 and traders took the positives to push the GBP v AUD exchange rate higher.
Some concerns still exist around productivity in the economy and the post-Brexit agreements are far from complete but the markets are taking the positives from the “Boris Bounce” until attention turns to the upcoming March 11 Budget.
Key Takeaways from the Reserve Bank Minutes
Another event on the economic calendar was the release of the Reserve Bank of Australia (RBA) minutes from its February meeting. The RBA had reviewed the case for a further rate reduction below the current 0.75% level, but considered the risks outweighed the benefits. The bank also updated the markets on further easing of monetary policy, stating.
“The board concluded that the cash rate should be held steady at this meeting,” the minutes showed. Members agreed that an extended period of low interest rates would be required in Australia to reach full employment and achieve its inflation target. “The board would continue to monitor developments carefully, including in the labour market, and remained prepared to ease monetary policy further if needed…”
The bank’s assessment was helped by a dip in the unemployment rate following their decision and traders now feel confident that they have priced in the RBA’s actions, so attention has turned back to economic results.
Tomorrow sees the release of another key number in the UK Consumer Price Index for January. The CPI was 1.3% in December and analysts are expecting this to increase to 1.6%. If the number undershoots then the pound could slip versus the Aussie. A stronger, or in line result, would add to today’s job’s rally and improve the pound forecast against the Australian dollar.
If you’re considering buying or selling Australian dollars and would like to compare rates or know more about the factors that could impact your exchange rate, feel free to contact me directly, I look forward to hearing from you.