The GBP vs AUD will digest UK employment data on Thursday after a recent break of the year’s support level.
GBPAUD – Daily Chart
The GBPAUD exchange rate broke down from uptrend support recently but support from May kept it steady. That will be the key level to watch as a break lower could open up a larger correction to 2.000.
UK employment figures are released at 2 pm HKT, with traders expecting to see the unemployment rate remain steady at 3.4%. Last month saw an additional 86k jobs added, and analysts will be looking for a strong showing after recent weakness in the pound.
GDP growth came in lower for the second consecutive quarter at -0.1%, which was a negative surprise.
There are also concerns that artificial intelligence is starting to remove job opportunities. Job vacancies have declined across the country as employers cut costs due to high taxation and sluggish economic growth. Job postings were down by 31% in the three months to May compared to 2022, McKinsey said. That could make it harder for the economic data to post a surprise gain in new jobs each month.
The Australian Reserve Bank surprised markets by keeping its interest rate fixed at 3.85% in the recent meeting. That should ensure the Aussie dollar remains stronger against the UK pound, where analysts expect rates to be reduced.
That wasn’t helped on Wednesday with a move higher on consumer price inflation, which rose from 3.4% to 3.6% in June. There is still an 86% chance of a rate cut from the Bank of England in August, down from 89% on Tuesday.
Food prices are at their highest level since February last year, while a fuel price drop last year impacted the annual figure this time around. Economists are seeing through these effects and the fact that the BoE had expected to see a move higher into September.
The UK may still see a rate cut in August, and the trendline break should be closely monitored to determine if a correction can unfold.
