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The Pound to Australian Dollar (GBP/AUD) exchange rate fell to a near one-month low on Thursday after stronger-than-expected Australian employment figures boosted the ‘Aussie’.

At the time of writing, GBP/AUD was trading around AU$1.9091, having recovered from an intraday low of approximately AU$1.9066.

Latest — Exchange Rates:

Pound to Australian Dollar (GBP/AUD): 1.911595 (-0.12%)

Pound to Dollar (GBP/USD): 1.332 (-0.41%)

DAILY RECAP:

The Australian Dollar (AUD) strengthened during Thursday’s Asian trading session following the release of Australia’s latest employment report.

The data showed employment increased by 76,300 in June, comfortably beating forecasts for a rise of 15,000.

The stronger-than-expected labour market reinforced expectations that the Reserve Bank of Australia (RBA) could continue raising interest rates later this year.

However, the risk-sensitive ‘Aussie’ struggled to hold onto all of its gains as a cautious market mood weighed on demand during European trade.

Meanwhile, the Pound (GBP) remained subdued as markets continued to assess Andy Burnham’s first week as Prime Minister.

Sterling had strengthened in the run-up to Burnham entering Downing Street as investors unwound the political risk premium previously built into the currency.

However, the Pound has since trended lower amid ongoing questions over how the government's spending commitments and tax cut pledges will be financed.

This uncertainty continued to limit Sterling on Thursday.

Near-Term GBP/AUD Forecast: PMI Surveys in Focus Looking ahead, Friday's Asian session brings Australia's preliminary PMI surveys.

If private sector activity slowed to near-stagnation in July, as expected, the Australian Dollar could face renewed pressure.

European trading then begins with the UK's June retail sales figures. A forecast 0.3% contraction in sales could weigh on Sterling.

Later in the morning, attention turns to the UK's preliminary PMI surveys, with investors particularly focused on the services reading. Any improvement in business activity could provide the Pound with modest support.

Meanwhile, broader market risk appetite and UK political developments are also likely to influence GBP/AUD trading, potentially leading to increased volatility.

The Pound to Australian Dollar (GBP/AUD) exchange rate opens the new week around 1.9271 after holding close to five-month highs, with Sterling remaining well supported while the Australian Dollar faces another busy week of domestic data and renewed scrutiny over China's economic outlook.

Latest — Exchange Rates:
Pound to Australian Dollar (GBP/AUD): 1.927065 (-0.05%)
Pound to Dollar (GBP/USD): 1.339 (-0.12%)
Australian Dollar to Dollar (AUD/USD): 0.694839 (-0.07%)

WEEKLY RECAP:

GBP/AUD spent much of last week consolidating just below the 1.93 level after a strong rally through June.

The Pound continued to outperform despite evidence that the UK economy is slowing.

Markets remain reluctant to price aggressive Bank of England easing while inflation stays above target, helping Sterling retain a yield advantage over several major currencies.

In its latest monthly outlook, MUFG said the Pound was among the strongest-performing G10 currencies through June, supported by resilient investor confidence and the fading inflation shock as oil prices retreated.

The Australian Dollar struggled to generate sustained demand.

Although global risk sentiment has improved following the easing of Middle East tensions, investors remain cautious over China's economic outlook, a key driver for Australian exports.

Reuters has reported that attention is now turning to China's second-quarter GDP and June activity data, with markets expecting slower growth after softer domestic demand and weaker investment. Those figures are likely to have an important bearing on the Australian Dollar this week.

In a recent client note, ING highlighted that Sterling is increasingly being driven by domestic developments, while commodity-linked currencies remain more exposed to changes in global growth expectations.

Near-Term GBP/AUD Forecast: China GDP and UK GDP in Focus For Pound Sterling, investors will watch Thursday's monthly UK GDP estimate for May, together with industrial production and trade balance figures. Stronger-than-expected data would reinforce the view that the UK economy has remained resilient despite softer business surveys.

For the Australian Dollar, the spotlight falls on China's second-quarter GDP, June retail sales and industrial production, all due on Wednesday. Stronger Chinese data would likely support the Australian Dollar by improving confidence in Australia's export outlook, while weaker figures could renew pressure on the currency.

Markets will also continue to monitor developments in commodity markets following the recent decline in oil prices and any fresh guidance from Reserve Bank of Australia officials after last week's policy decision.

If UK GDP surprises to the upside while Chinese growth data disappoints, GBP/AUD could retest resistance around 1.94.

However, stronger Chinese activity data and firmer commodity prices could allow the Australian Dollar to recover, pulling the pair back towards 1.90.