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Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Muted as Aussie Unemployment Rises

May 16, 2019 - Written by John Cameron

Pound Australian Dollar (GBP/AUD) Exchange Rate Flat on Fears of Near-Term RBA Rate Cut

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate was left muted and the pairing is currently trading at an inter-bank rate of AU$1.8546.

On Thursday data revealed that Australian unemployment edged up to 5.2%, leaving April’s rate at the highest level since August 2018.

As unemployment moved further away from February’s eight-year low, it likely increased pressure on the Reserve Bank of Australia (RBA) to slash interest rates.

The participant rate rose from 65.7% to a record high of 65.8%.

This left the pace of hiring unable to keep up with the increase in the Australian labour force, which likely weighed on the ‘Aussie’.

Sterling (GBP) Muted as 1922 Committee Meeting ‘Very Frank’

This morning under growing pressure to announce a departure timetable, Prime Minister Theresa May held talks with senior conservative MPs.

Theresa May met the 1922 Committee of backbench Tory MPs to discuss her future, which left Sterling at a three month low this morning against the US Dollar.

Following the meeting, reports revealed that May had not set a date to step down.

Instead, the Prime Minister arranged to meet the chairman of the Committee after the second reading of the Withdrawal Agreement.

The meeting was described by Chairman Chairman of the 1922 Committee, Sir Graham Brady as ‘very frank’.

In a statement from, Sir Brady, he said:

‘We have agreed that she and I will meet following the second reading of the bill to agree a timetable for the election of a new leader of the Conservative and Unionist Party.’

Australian Dollar (AUD) Flat as US Escalates US-China Trade Tensions

The US escalated trade tensions with China on Wednesday, dampening risk-appetite further.

Huawei, Chinese telecoms giant as well as 70 affiliates were added to the US Commerce Department’s ‘Entity List’.

This means Huawei is banned from acquiring any technology or components from US firms without United States government approval.

Commenting on the sanctions, Roger Sheng, Gartner Analyst stated:

‘The impact is well-beyond its 5G ambitions because without these American suppliers like Qualcomm and Marvell, it can’t even keep a normal operation.

‘One question remains unanswered though, is how strict will the US execute the ban.’

Pound Australian Dollar Outlook: Will Disappointing Aussie Inflation Expectations Weigh on AUD?

Looking ahead to Friday, the Australian Dollar (AUD) could fall against Sterling (GBP) following the release of the Australian consumer inflation expectations data.

If inflation expectations slips further than forecast, sentiment in the ‘Aussie’ could be dampened.

Meanwhile, further developments in the US-China trade tensions could cause the risk-sensitive Australian Dollar to slide.

If tensions heighten further, investor risk-appetite could be left dampened and the Pound Australian Dollar (GBP/AUD) exchange rate could slide.

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