Australian Dollar (AUD) Falls on back of Poor Employment Data as Pound Sterling (GBP) Gains Traction
The resilient AUD was brought to an unexpected halt following yesterday’s poor Employment figures, which returned results well below initial forecasts. During Thursday’s Asian session, Traders remained bullish on the AUD despite the Federal Reserve increasing Interest Rates in the USA, which saw the AUD appreciate against both the US Dollar (USD) and GBP. However, while the Employment Change for February was forecast at +16.0k added jobs, it fell short of this target at -6.4k, representing an increase in the Unemployment Rate from 5.7% to 5.9%.
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These results eradicated much of the gains the AUD had made against a basket of major currencies over the past week with the shortfall in employment seeing a sell-off of the AUD and a sharp appreciation in the GBP AUD.
As forecast, the Bank of England (BoE) decided to keep the Cash Rate unchanged at 0.25%. Although the vote to keep rates the same was not unanimous within BoE, the ultimate decision may give the economy time to adapt to the UK’s transition out of the European Union (EU), after the House of Lords and House of Commons both afforded Theresa May the ability to implement Article 50, which she plans to enact on March 27th.
The BoE strategy on Interest Rates has highlighted their intention to potentially increase the cash rate at some point during 2017, which will be dependent on the rate at which inflation is rises at that point in time. This Hawkish outlook is a positive sign for the UK heading forward as short-sellers and traders began buying Pounds, seeing the GBP AUD rise from a low of 1.5902 to a high of 1.6130 in yesterday’s European and US trading sessions.
At time of writing, the GBP AUD interbank rate is trading at 1.6105.