GBP/AUD is extending its decline in early trading on Thursday. Currently, one British pound buys 1.9030, down 0.26% as of 6:10 AM UTC. The pair has been in red for the entire week and has lost its gains during the UK election. Earlier today, it touched a weekly low at 1.9002.
The Aussie is now driven by recent employment data, which reduced expectations for an interest rate cut in February.
The Australian Bureau of Statistics (ABS) said that the economy had added 39,900 jobs last month and the unemployment rate declined to 5.2%. Analysts anticipated the labor market to add only 14,000 jobs, with the jobless rate maintaining at 5.3%. Thus, markets now give a 45.2% chance that the Reserve Bank of Australia (RBA) will cut the rate in February, down from 56.8%.
Citi economist Josh Williamson commented:
“Heading into their Christmas-January hiatus, senior RBA officials will probably be pleased with the small reduction in the trend unemployment rate.”
In total, the Australian economy added 4,200 full-time positions last month, compared to 10,300 jobs lost the previous month. The number of part-time jobs jumped to 35,700, from 8,700 lost in October.
Williamson stressed that about 90% of the job gains in November are due to part-times and the pre-Christmas period. He said:
“We note that, for three years in a row, November’s employment growth has been above average with most of the gains coming from part-time jobs. However, the seasonal adjustment mechanism should account for this.”
All in all, the participation rate maintained at 66% in November, which is in line with analyst expectations.
Yesterday, the UK inflation data couldn’t stop the pound’s decline, as investors are worried about a potential no-deal Brexit after Prime Minister Boris Johnson said he would rule out any attempt to extend the deadline for the Brexit transition. The PM will put the amended Withdrawal Agreement Bill to the vote in parliament tomorrow.
The pair is expected to become volatile later today as the Bank of England is about the interest rate decision along with the updated monetary policy.