Australian dollar to pound sterling: GBP given a 'free pass' against the Aus dollar

• The pound sterling to Australian dollar exchange rate is a quarter of a percent higher on a day-to-day basis coming in at 1.6921.
• The Australian dollar to pound sterling exchange rate is therefore at 0.5909.

The Australian dollar came under pressure on Thursday after it was shown that Australia’s economy added 1100 jobs in October versus 10000K expected by the markets.

The September release of 9100 was significantly revised down to 3300.

AUDUSD plunged from 0.9530 to 0.9466, while the GBP/AUD exchange rate shot higher.

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GBP given a free pass vs the Aus dollar

For most of the day GBPAUD traded within tight ranges with sterling managing to close only marginally higher than the previous session.

"Today however, Aussie employment data released in the early hours showed full time employment dropped by the most in a year. This has given sterling a free pass to victory with the rate now comfortably above 1.69, and we expect sterling to be able to maintain gains during trading today," says Sasha Nugent at Caxton FX.

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Australian employment conditions predicted to pick up

While the currency markets were clearly unimpressed by today's Australian labour data, analyst Justin Fabo at ANZ Research is decidedly more positive:

"Although labour market conditions remain soft there are tentative signs in other indicators that employment outcomes should be a little better in coming months. The number of unemployment benefit recipients has fallen marginally and job ads have stabilised, both of which are consistent with the trend flattening in the ABS unemployment rate measure.

"Firms are also reporting less spare capacity in their businesses which has typically led somewhat better labour market conditions."

If these predictions are in fact correct then we can take the viewpoint that the current Aus dollar selloff will ultimately be contained.

RBA won't lower cash rate

Forex markets appear to be betting that today's employment data will likely force the Reserve Bank of Australia to take a more dovish tone when it comes to future interest rate decisions.

In line with his more positive views on the employment situation it will come as little surprise that ANZ Research are more sanguine when considering the prospects of an interest rate cut at the RBA:

"Our view remains that the RBA is unlikely to lower the cash rate further given rates are already very low; housing market activity is picking up strongly; and lags mean that cuts in the cash rate this year are still feeding through the economy.

"Nevertheless, the challenges the economy faces over the coming year, namely the transition to non-mining sources of growth, means that we don’t expect the cash rate to rise until early 2015, and then the rate of normalisation is likely to be gradual."