This week, our currency strategists focused on the BOC Monetary Policy Statement for potential high-quality setups.

Out of the four scenario/price outlook discussions this week, one discussion arguably 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.

If you’d like to follow our “Watchlist” picks right when they are published throughout the week, you can subscribe to BabyPips Premium.

Check out our review of that discussion to see what happened!

GBP/AUD: Tuesday – June 10, 2025

GBP/AUD 1-Hour Forex Chart by TradingView

On Tuesday, our strategists had their sights set on the U.K. employment data and its potential impact on the British pound.

Based on our Event Guide, expectations were for the claimant count change to rise by +80K from the previous +112K increase, with the unemployment rate expected to hold steady at 4.5% and average earnings anticipated to remain flat at 5.6%.

With those expectations in mind, here’s what we were thinking:

The “Sterling Surge” Scenario:

If the jobs data came in stronger than expected, particularly showing resilient wage growth or a lower unemployment rate, we anticipated this could dampen expectations for aggressive BOE rate cuts.

We focused on GBP/CHF for potential long strategies in a risk-on environment, especially given SNB Chairman Schlegel’s recent comments about cutting rates and curbing franc strength. In a risk-off environment, GBP/NZD long made sense given the RBNZ’s dovish positioning and New Zealand’s weaker economic backdrop.

The “Sterling Slump” Scenario:

If U.K. employment figures disappointed, showing rising claimant count beyond expectations or cooling wage growth, we thought this could weigh on GBP as markets revived dovish expectations for the Bank of England.

We eyed GBP/AUD for potential short strategies if risk sentiment stayed positive, particularly given the pair’s position near key resistance levels and the RBA’s hawkish stance on inflation. If risk sentiment turned negative, GBP/JPY shorts looked promising given the yen’s safe-haven appeal during periods of uncertainty.

What Actually Happened

The U.K. jobs report came in with mixed signals but generally aligned with our bearish GBP bias:

• Employment change showed the U.K. added 112,000 jobs in the three months through March 2025, representing the weakest gain since December
• Average earnings slowed to 5.5% from a revised 5.7%, missing the 5.6% expectation
• Unemployment rate edged up to 4.5%, matching expectations but representing the highest level since August 2021
• Jobless claimant count rose by only 5,200, significantly better than the 22,300 expected but still an increase from the previous reading

Market Reaction

This outcome fundamentally triggered our GBP bearish scenarios, and with risk sentiment remaining mixed ahead of the crucial U.S. CPI data later in the week, GBP/AUD became our focus pair.

Looking at the GBP/AUD chart, we saw initial selling pressure after the jobs release around the 2.0880 area, with the pair falling through S1 at 2.0764 then testing S2 at 2.0708 as weaker-than-expected wage growth likely weighed on sterling as markets repriced BOE expectations, pulling forward rate cut bets from November to September.

However, the selloff turned a corner upon testing the 2.0700 major psychological level as sterling’s bearish momentum reversed course on overall USD weakness. Low conviction trading ahead of Wednesday’s U.S. CPI release also translated to choppy price action and prevented sterling from sustaining its directional bias.

GBP/AUD soon found itself back above S1 and eventually the trend line, as AUD weakness ensued while market watchers were also unimpressed by U.S.-China trade talk updates. Not even weaker than expected U.K. GDP data released later in the week was able to spur significant declines for GBP/AUD, as escalating geopolitical tensions between Israel and Iran weighed heavily on the higher-yielding Aussie.

The Verdict

So, how did it all play out?

Our fundamental analysis correctly anticipated potential GBP weakness on disappointing employment data, particularly the wage growth miss and rising unemployment. The initial market reaction aligned with our bearish bias as the pair broke below key technical levels.

However, this discussion was “not likely” supportive of a net positive outcome for most trading approaches. While the fundamental trigger materialized as expected, the broader market environment worked against sustained bearish momentum in GBP/AUD. The combination of dollar weakness on weak inflation prints, mixed with risk aversion from Middle East tensions, created challenging conditions for directional strategies.

Only very active intraday traders with nimble risk management would have likely captured a net positive outcome by taking profits on the initial decline and avoiding the subsequent consolidation. The lack of sustained follow-through highlighted the importance of considering broader market themes and upcoming catalysts when trading event reactions.

For traders who entered short positions after the weak jobs data, proper trade management would have been crucial given the pair’s quick reversal and consolidation around another major psychological support.

The key lesson here is that while our analysis caught the right fundamental direction, external factors like pre-CPI positioning and overall market sentiment played significant roles in limiting the follow-through, emphasizing the importance of staying aware of broader market themes even when trading specific event reactions.