GBP/AUD is tumbling in early trading on Thursday, after surging by 0.77% yesterday. Currently, the pair is trading at 1.9128, down 0.35% as of 6:58 AM UTC.
The Aussie jumped against majors after the Australian Bureau of Statistics (ABS) data showed that the unemployment rate surprisingly declined in December, prompting investors to trim their bets on an interest rate cut from the Reserve Bank of Australia (RBA).
The jobless rate dropped to 5.1%, while analysts expected no change at 5.2%. Employment increased by 28,900 people, while economists expected an increase of only around 10,000. The participation rate remained at 66%. The ABS said that the bushfires lead to a “disruption to data collection” in Victoria, New South Wales, and the A.C.T.
Economists are now pricing in a 24% chance of a rate cut in February, from 56% yesterday.
Callam Pickering, an economist at Indeed and former RBA executive, said:
“These labor market figures will be interpreted in a positive manner. However, with the bushfires likely to disrupt economic activity, and the with the Reserve Bank already leaning towards cuts, we expect further easing in the months to come.”
The decline in the GBP/AUD pair comes after an impressive rally in which the pound gained 1.50% on Tuesday and Wednesday. Yesterday, the sterling surged on Confederation of British Industry’s report, according to which optimism in British factories rose to the highest level in about six years in the three months to January. As a result, investors cut their bets on an interest rate cut by the Bank of England next week.
The index of manufacturing optimism increased to +23 in January, from -44 in October, the highest since April 2014.
Investec chief economist Philip Shaw stated:
“The results confirm other survey and anecdotal evidence pointing to economic growth stepping up a gear since December’s election.”
The Aussie might be under pressure amid the bushfires, which seem to return after several days of rain. Yesterday, some residents of the capital city of Canberra were temporarily evacuated after a fire broke out near the airport.
