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Pound Australian Dollar (GBP/AUD) Exchange Rate Steady, UK Unemployment Falls in September

November 12, 2019 - Written by John Cameron

GBP/AUD Exchange Rate Rangebound, UK Unemployment Improves

The Pound Australian Dollar (GBP/AUD) exchange rate steadied this morning, with the pairing currently trading around AU$1.877 after September’s UK ILO unemployment rate rose from 3.9% to 3.8% in September, its lowest since early 1975’s third quarter.

However, Sterling’s gains were held back by falling UK average earnings, with September’s monthly figure falling from 3.8% to 3.6% as the British economy continues to struggle due to ongoing Brexit-uncertainty.

Analysts at Reuters commented:

‘[M]any employers are worried that the uncertainty will continue next year even if Johnson wins the election as he faces the challenge of hammering out a future trade deal with the European Union before a deadline at the end of 2020.’

UK political developments remain in focus today, with the Pound (GBP) losing some of yesterday’s gains after the Brexit Party announced that it would not contest Tory-held seats and instead target Labour marginal.

Today saw rising doubts over the Brexit Party’s move, with analysts no increasingly sceptical over whether this will improve the Tory’s chances in the upcoming 12th December election.

Chris Curtis, YouGov’s Political Research Manager, commented:

‘[Brexit Party leader Nigel] Farage’s decision to stand aside in current Conservative-held seats and not in Labour-held seats that the Tories will be looking to gain will likely make very little difference.’

AUD/GBP Exchange Rate Steady, US-China Trade Uncertainty Holds Back ‘Aussie’

The Australian Dollar (AUD) failed to gain on the Pound (GBP) today despite the National Australia’s Bank business confidence figure for October showing a surprising uptick.

Alan Oster, Chief Economist at the NAB Group, was cautious however, saying:

‘This month's survey results continue to point to only modest outcomes in the business sector, though forward-looking indicators have improved slightly and may be pointing to a stabilization in conditions.’

Meanwhile, the risk-sensitive ‘Aussie’ remains subdued on US-China trade jitters following the recent escalation of the Hong Kong protests.

Mitul Kotecha, Senior Emerging Markets Strategist at TD Securities, was however optimistic about a deal next month, saying:

‘The reality is, of course, that both sides do want a deal. It does seem like we’re heading towards at least a phase one deal and it’s sometime in December.’

Any further signs of improving relations between the world’s two largest economies could provide some uplift for the risk-averse Australian Dollar.

GBP/AUD Outlook: Could the ‘Aussie’ Rise on Improving Australian Wage Prices?

Australian Dollar (AUD) traders will be looking ahead to tomorrow’s release of Australia’s wage price index, which is expected to rise by 0.5% in the third quarter.

Tomorrow will also see a speech by Michelle Bullock, the Assistant Governor at the Reserve Bank of Australia. Any dovish comments about the Australian economy, however, could see the AUD/GBP exchange rate fall.

Meanwhile, Sterling investors will be awaiting tomorrow’s release of the UK Consumer Price Index figure for October, which is expected to improve by 1.6% on the year.

The GBP/AUD exchange rate will continue to be driven by British political developments this week, with any indication that the Tories could consolidate their lead over the other major parties likely buoying Sterling on a return of political stability.

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