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Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Muted a UK Female Unemployment Falls to Record Low

May 14, 2019 - Written by John Cameron

Pound Australian Dollar (GBP/AUD) Exchange Rate Flat as UK Unemployment Falls to 44-Year Low

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate edged down and the pairing is currently trading at an inter-bank rate of AU$1.8648.

Data released on Tuesday revealed that the UK unemployment rate dipped to a 44-year low of 3.8% in the three months leading to March.

Unemployment in the UK has not been lower since the final quarter of 1974.

Meanwhile, the unemployment rate for women hit an all-time low of 3.7%.

The amount of people in work was the joint highest since records began in 1971 at 76.1%.

Added to this, the economic activity for people between the ages of 16 and 64 was at 20.8%, close to a record low.

However, further data revealed that workers’ pay did not rise as quickly in the first three months of 2019 which likely weighed on the Pound.

Sterling (GBP) Muted as Brexit Fears Boost UK Employment

It has been suggested that the surge in employment in the UK is due to Brexit pessimism as firms are hiring rather than investing.

Reports suggest that some firms are hiring over investing in expensive machinery because it is easier to lay off staff if the UK crashes out of the European Union.

Commenting on this, Investment Director for Personal Investing at Fidelity International, Tom Stevenson said:

‘The murky outlook is leading businesses to hire now with the option to fire later rather than make irreversible investments in new kit. Perhaps it is still too soon to get ahead of ourselves, though – a week before new inflation data, there’s a question mark over how real the earnings growth is.

‘Rising wages are bound in due course to feed through into wider price rises.’

Australian Dollar (AUD) Flat as China Escalates Trade Tensions

On Monday afternoon, China escalated US-China trade tensions despite calls from the US President Donald Trump not to retaliate.

China announced it will be raising tariffs on $60 billion worth of US goods, commencing on 1 June which weighed on the risk-sensitive AUD.

This came three days after the US more than doubled tariffs on $200 billion worth of Chinese goods.

The President also instructed the US trade department to ‘begin the process of raising tariffs on essentially all remaining imports from China.’

However, Trump revealed that he had not yet made a decision on whether he would continue with the additional tariffs.

Meanwhile, on Tuesday morning China’s Foreign Ministry held a briefing in Beijing.

Spokesman, Geng Shuan stated that China hopes the US does not underestimate its determination to protect interests.

However, he also stated that both countries have agreed to continue trade discussions to resolve trade tensions.

Pound Australian Dollar Outlook: Will Disappointing Aussie Consumer Confidence Weigh on AUD?

Looking ahead to the start of Wednesday’s session, the Australian Dollar (AUD) could slip against the Pound (GBP) following the release of Westpac's consumer confidence.

If consumer confidence slides in May, it could dampen sentiment in the ‘Aussie’.

Meanwhile, the Australian Dollar could receive an upswing of support following the release of the Australian wage price index.

If Australian wages edge up higher than expected in the first quarter of 2019, it could cause the Pound Sterling Australian Dollar (GBP/AUD) exchange rate to fall.

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