Pound To Australian Dollar Forecast - Tomorrow's GBPAUD Predicted To Jump If Aussie Jobs Disappoint

Uncertainty over the outlook of UK economy continues to weigh on the Pound (GBP), although the Australian Dollar (AUD) may struggle to maintain dominance this week

A modest uptick in September’s Westpac Leading Index helped to boost the Australian Dollar on Wednesday, particularly with China’s third quarter GDP data also proving encouraging.

However, the GBP/AUD exchange rate was kept on a narrow downtrend after UK employment data confirmed that the domestic labour market remained generally robust in September.

Today's GBP/AUD conversion is seen to trading a little lower on the day despite good data releases from the UK.

The British poundwas able to advance slightly on Tuesday afternoon, keeping the ‘Aussie’s previous bullishness at bay as UK officials indicated Parliament would be able to vote on the terms of a Brexit.

During a High Court hearing on whether or not Parliament should have a vote before Article 50 is activated, a lawyer for the government claimed that as Brexit negotiations draw to an end (in 2019 or later) MPs would likely have to ratify the terms of the agreement before it is passed.

Investors were encouraged to buy into the Australian Dollar following the publication of the Reserve Bank of Australia’s October meeting minutes, with cemented the impression that the central bank is in a less dovish mood.

Even so, the Pound to Australian Dollar exchange rate recovered some ground on the back of the UK’s inflation data, which was seen to lower the odds of further BoE easingFED source, however, the GBP/AUD exchange rate is likely to maintain its downtrend thanks to the relative strength of the Australian Dollar.

Ahead of the weekend the Australian Dollar (AUD) received a modest boost from comments by Fed Chair Janet Yellen, who indicated that the pace of monetary tightening is likely to need to remain slow.

This helped to shore up the appeal of the commodity-correlated currency further, particularly following the day’s better-than-expected Chinese Consumer Price Index.

With the appeal of Sterling still generally limited by worries over the UK’s future access to the single market, this saw the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate slump sharply to a fresh three-year low.

Latest Pound / Australian Dollar Exchange Rates

UK House Prices Fail to List British Pound X-Rates Today

Confidence in Pound Sterling (GBP) exchange rates did not particularly pick up on Monday morning, despite the Rightmove House Price Index for October pointing towards a continued recovery within the domestic housing market.

Markets were spooked yet again by developments within the Brexit saga, with rumours circulating that Chancellor of the Exchequer Philip Hammond was falling out with other members of the Cabinet on the subject of migration controls.

Further downside pressure for GBP exchange rates is likely to come from Tuesday’s UK Consumer Price Index report, which is expected to show that inflationary pressure increased modestly from 0.6% to 0.9% in September.

However, as researchers at BNP Paribas noted:

‘Data and news flow is likely to remain challenging for the GBP for the time being, but with short positioning stretched and our models signalling cheapness, we see scope for a squeeze higher on upside surprises and would not attempt to chase the currency lower from here.’

GBP/AUD Exchange Rate to Remain Under Pressure on RBA Minutes

The minutes for the Reserve Bank of Australia’s (RBA) October meeting could encourage the ‘Aussie’ to climb higher, assuming that policymakers are found to have adopted a more hawkish outlook on monetary policy.

Should the RBA have demonstrated greater confidence in the robustness of the domestic economy and continued to move away from its earlier easing bias then the GBP/AUD exchange rate is likely to be pushed back towards its recent lows.

If any increased tone of dovishness is in evidence, though, the antipodean currency may struggle to maintain a bullish footing, particularly if market risk appetite does not hold up over the coming days.

Mixed Labour Market Data Forecast to Prompt Australian Dollar (AUD) Exchange Rates Volatility

Also in focus this week for the Australian Dollar will be September’s labour market report, which could undermine the appeal of the antipodean currency if the volatile data discourages investors.

Expectations are for a solid uptick in domestic employment, although this may have a limited positive impact if an increase in the participation rate prompts the unemployment rate to rise from 5.6%.

Weakness within the Australian labour market could prompt the GBP/AUD exchange rate to strengthen, suggesting that the fundamentals of the domestic economy are not as strong as investors would hope to see.