August 17, 2021 - Written by John Cameron
STORY LINK Pound Australian Dollar (GBP/AUD) Exchange Rate Edges Higher on Strong UK Jobs Data
GBP/AUD Exchange Rate Rises, UK Jobs Data Beats Forecasts
The Pound Australian Dollar (GBP/AUD) exchange rate rose today following stronger-than-expected UK labour data for June, with joblessness falling from 4.8% to 4.7%, buoying optimism in the nation’s economic recovery. The pairing is currently trading around AU$1.89.
UK Chancellor Rishi Sunak gave a mixed response, but was on the whole optimistic about the latest data, saying:
‘I know there could still be bumps in the road but the data is promising. There are now more employees on payrolls than at any point since March 2020 and the number of people on furlough is the lowest since the scheme launched.’
As a result, the GBP/AUD exchange rate has risen on hopes that the UK could see a rate hike from the Bank of England (BoE) sooner rather than later.
Kevin Brown, savings specialist at Scottish Friendly, explains:
‘The post-pandemic jobs recovery continues to roll on and it now seems less likely that we will see significant redundancies being made from September onwards once the furlough scheme comes to end.
‘Although there are fewer people in work than before Covid-19 struck in early 2020, job vacancies are at a record high and average weekly pay growth is rising faster than anticipated.’
However, with daily cases of Covid-19 rising throughout the UK, some Pound traders are remaining cautious. Hospitalisations are expected to rise in the in the autumn months, which could prompt the return of some lockdown restrictions.
Australian Dollar (AUD) Exchange Rate Sinks on Dovish RBA Minutes
The Australian Dollar (AUD) fell against the Pound (GBP) today following the Reserve Bank of Australia’s (RBA) latest meeting minutes, which cited the outbreaks of the Delta variant of the coronavirus as disrupting the nation’s economic recovery.
Analysts at Bloomberg summed-up the contents of the RBA’s minutes:
‘The Reserve Bank of Australia said it will continue to review its bond-buying program based on economic conditions and the health situation as the nation faces lockdowns to combat the delta variant of coronavirus.’
Consequently, the ‘Aussie’ has suffered this week on a mixture of downbeat economic data for China – Australia’s largest trading partner – and growing concerns over domestic outbreaks of Covid-19.
The RBA’s minutes also showed:
‘The board would be prepared to act in response to further bad news on the health front should that lead to a more significant setback for the economic recovery.’
Australia’s central bank’s increasingly gloomy and uncertain forecasts on top of this week’s underwhelming Chinese economic data have limited the appeal of the risk sensitive Australian Dollar.
GBP/AUD Exchange Rate Forecast: Could Rising UK Covid-19 Infections Weaken Sterling?
Australian Dollar (AUD) traders will be looking ahead to tomorrow’s release of the latest Australian wage price index – for the second quarter - and Westpac leading index for July.
Could an uptick in either figure boost confidence in the Australian economy and drive-up the AUD/GBP exchange rate?
Pound (GBP) investors will eye tomorrow’s release of the latest UK inflation figure. If this points to an improvement in the nation’s economic outlook, then the Pound to Australian Dollar exchange rate would head higher.
However, if UK Covid-19 infections and hospitalisations continue to rise, then the GBP/AUD exchange rate would shed some of its gains.
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TAGS: Australian Dollar Forecasts Pound Australian Dollar Forecasts