This week our currency strategists focused on Australia’s Employment Report (April 2025) for potential high-quality setups.
Out of the four scenario/price outlook discussions this week, the GBP/AUD discussion saw both fundie & technical arguments triggered to become a potential candidate for a trade & risk management overlay.
Watchlists are price outlook & strategy discussions supported by both fundamental & technical analysis, a crucial step towards creating a high quality discretionary trade idea before working on a risk & trade management plan.
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Check out our review on that discussion to see what happened!
GBP/AUD: Tuesday – May 13, 2025
GBP/AUD: 1-Hour Forex Chart by TradingView
On Tuesday, our strategists had their sights set on the upcoming Australian employment data for April 2025 and its potential impact on the Australian dollar.
Based on our Event Guide, expectations were for a modest pickup in hiring with a net employment change of +20.9K (up from the prior month), while the unemployment rate was expected to hold steady at 4.1%. With those expectations in mind, here’s what we were thinking:
The “Aussie Advance” Scenario:
If Australia’s jobs data came in stronger than expected, we anticipated this could reinforce the RBA’s stance on keeping rates at current levels.
We focused on AUD/JPY for potential long strategies if risk sentiment was positive, especially given Japanese officials’ recent cautious comments on currency movements. In a risk-off environment, AUD/CAD long was our pair of choice given recent weakness in Canadian economic indicators and the BOC’s dovish stance.
The “Aussie Avalanche” Scenario:
If the jobs data disappointed, mainly showing lower job gains or concerning details in the employment breakdown, we thought this could fuel RBA rate cut speculation.
In this case, we considered AUD/USD for potential short strategies in a risk-off environment, particularly given the pair’s recent struggle at resistance areas and the generally firm U.S. dollar amid fading Fed cut expectations. If risk sentiment leaned positive, GBP/AUD long made sense given the U.K.’s better-than-expected economic performance and the BOE’s relatively less dovish stance compared to the RBA.
What Actually Happened
Australia’s April employment report delivered a massive upside surprise:
- Total employment surged by 89,000 jobs (vs. 20.9K forecast)
- Full-time employment increased by 59,500 positions
- Part-time jobs grew by 29,500
- Unemployment rate held steady at 4.1% as expected
- Participation rate rose to 67.1% from 66.8% in March
- Monthly hours worked remained essentially unchanged
Despite the headline beat, the flat hours worked data suggested some underlying softness in labor demand, a detail that traders quickly focused on after the initial positive reaction.
Market Reaction
This outcome fundamentally triggered our “Aussie Advance” scenario, but market forces quickly shifted to our bearish AUD outlook as traders looked past the headline numbers to focus on the details and broader central bank expectations.
Looking at the GBP/AUD chart, the pair initially dipped close to the bottom of the channel and the 2.0600 major psychological support, as the strong headline jobs figures sparked a knee-jerk AUD rally. However, this proved short-lived as market participants digested the flat hours worked data and maintained RBA rate cut expectations.
The release of better-than-expected U.K. GDP data the following day (0.7% q/q vs. 0.6% forecast) provided additional support for GBP/AUD. The pair broke above the Pivot Point (2.0668) and gained momentum through the European session.
BOE officials Lombardelli and Greene’s comments reinforcing the need for caution on inflation, despite acknowledging improving trends, added further support for sterling. Meanwhile, analysts continued to speculate that the RBA would proceed with rate cuts despite the headline jobs beat, noting the election campaign might have boosted employment numbers only temporarily.
By Friday’s close, GBP/AUD had tested the channel resistance near the 2.0800 handle before settling around 2.0730, well-above both the event price and discussion price levels.
The Verdict
So, how’d we do?
Our “Aussie Avalanche” scenario correctly anticipated that if employment data disappointed, GBP/AUD longs would make sense in a risk-positive environment. While the headline jobs figures didn’t fall short, the market’s focus on underlying details and persistent RBA rate cut expectations effectively created the same bearish AUD environment we had anticipated.
If traders had focused on our fundamental analysis of central bank divergence rather than solely on the headline jobs number, they would have found GBP/AUD’s initial dip a good entry opportunity. The pair’s subsequent rally through the Pivot Point toward the channel resistance provided a substantial move of more than 200 pips from the post-data reaction low to the weekly high.
Trade management would have been straightforward with clear technical levels to guide decision-making. The steady uptrend after the initial volatility offered multiple opportunities to trail stops higher while targeting the next psychological ceiling at 2.0800.
Overall, we think this discussion “likely” supported a net positive outcome as the fundamental thesis (RBA rate cuts vs. BOE caution) proved correct despite the headline jobs surprise. The pair closed well above the event price levels at the Friday close, confirming the validity of our bullish GBP/AUD outlook in a risk-positive environment.