- Australian Dollar suffers bout of weakness on disappointing employment data

- But, economists see improvements ahead

- GBP/AUD exchange rate eyes floor at 1.8180 for support

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The British Pound is seen trading near key levels against the Australian Dollar on Thursday, April 19 with fears that a more sustained slide in the GBP/AUD exchange rate could take place if this level gives way.

The Pound, under pressure in the wake of UK inflation data mid-week, briefly spiked higher against its Australian counterpart at 02:30 B.S.T when Australian employment numbers for March surprised to the downside.

The headline employment change showed growth in jobs of 4.9K, this is well below expectations for a robust reading of 20.3K. However, it does represent an improvement on the previous month's contraction of 6.3K.

Above: The Pound spikes in response to Australian employment numbers, the bounce did ultimately prove to be a knee-jerk reaction.

Full-time employment fell by 19.9k and part-time rose by 24.8k. Past employment results were also revised due to ABS annual seasonal re-analysis. Notably, Feb’s result was revised down to -6.3k from +17.5k and thus ended sixteen consecutive months of job gains.

The unemployment rate printed at 5.5%, and at two decimal places, is broadly unchanged from Feb – 5.53% from a revised 5.55%. The participation rate was at 65.5% with seasonal re-analysis also seeing revisions to past estimates with Feb’s figure at 65.6%.

"March’s 4.9k rise is a soft result and the seasonal revisions add further evidence that momentum has come out of the jobs market with Feb’s revised contraction marking the end of sixteen consecutive monthly job gains," says Simon Murray, an economist with Westpac.

However, what is important is that economists, and clearly the foreign exchange markets too, believe the outlook for the Australian jobs market is constructive.

"Rising participation had accompanied the jobs boom in 2017 but that too has eased back in line with the weaker jobs numbers over Feb and Mar. Overall, to put it into context, the stellar pace of jobs growth seen in 2017 was not sustainable, and while 2018 has begun on a slower footing, positive business conditions and economic activity point to a year of decent jobs growth," says Murray.

The Pound is currently trading at 1.8241, having been as high as 1.8475 earlier in the week; which in itself tells us of quite a significant reversal in fortunes.

Above: The GBP/AUD is testing a key support level

Regarding the outlook, the Pound has fallen back to a key support level against the Australian Dollar, that if broken, could spell for a more protracted pullback and potentially spell the end of the GBP/AUD's strong multi-month run.

It appears that the Sterling part of the GBP/AUD exchange rate pair is in control so whether or not a break lower transpires will likely rest with UK data and Brexit developments we believe.

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