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Pound Australian Dollar Exchange Rate Boosted by Optimistic UK Employment Data

December 14, 2021 - Written by John Cameron

Pound Australian Dollar (GBP/AUD) Exchange Rate Ticks Upward after Positive UK Jobs Data

The Pound Australian Dollar Exchange Rate has trended upward this morning as confidence in the Pound (GBP) was boosted by positive jobs data and increased odds of an interest rate rise by the Bank of England (BoE).

At time of writing the GBP/AUD Exchange Rate is at around $1.8584, which is up roughly 0.3% from this morning’s figures.

Pound (GBP) Muted Ahead of BoE Thursday Meeting Despite Positive Jobs Data

The Pound (GBP) has moved within a narrow range against its rivals today as the currency remains subdued ahead of the Bank of England’s Thursday meeting.

Sterling saw an initial boost as the European markets opened this morning as positive jobs data showed that unemployment in the UK fell in October despite the country’s furlough scheme coming to an end. The unemployment rate fell to 4.2% down from 4.3% in September for the sixth consecutive month.

Data collected by the Office of National Statistics (ONS) showed that British employers hired record numbers of staff in November whilst vacancies hit a record high of 1.219 million, around 434,500 more than pre-pandemic levels.

Analysts are concerned that this lack of economic activity could undermine the country’s economic recovery and place further pressure on the economy as it struggles to cope with the Omicron variant.

Tony Wilson, director at the Institute for Employment Studies , felt that the government needed to do more to support individuals in their return to work in order to combat this stagnation:

‘The number of people out of work due to ill health has hit its highest since 2005, at 2.5 million. As we said last month, these problems just won’t fix themselves.

‘And with the prospect of tighter Covid restrictions in the new year, the government needs to be planning now for more support to help people get back into work as well as to protect those jobs that may be at risk in a Plan C lockdown.’

Today’s employment data is likely to place further pressure on the BoE ahead of their Thursday meeting. Policymakers for the central bank had previously stated they were waiting for more robust post-furlough employment data before making a decision on interest rates, although given the additional uncertainty generated by the Omicron variant the markets are still seeing a rate rise by the BoE as extremely unlikely.

Investors have been surprised by the BoE’s decisions before however, and if a rate rise is announced on Thursday then it is likely to drive a sharp appreciation of the Pound..

Australian Dollar (AUD) Trends Upwards as Confidence in Recovery Grows

The Australian Dollar (AUD) has risen against its riskier competitors today although has struggled against safer currencies, as investors await multiple central bank meetings on Thursday.

The ‘Aussie’ was likely buoyed this morning by news that business confidence in the country has risen by 2 points in data collected by National Australia Bank (NAB). With vaccinations approaching 90% in the country, confidence remains high that Australia’s recovery could continue to grow despite fears over the Omicron variant.

The Australian Dollar has also likely been underpinned by the rising price of iron ore, as China yesterday announced further stimulus measures in order to aid the country’s post-covid recovery.

GBP/AUD Exchange Rate Forecast: Will BoE Surprise Investors Again?

Looking ahead to the rest of the week for the UK, s a forecast rise in domestic inflation in November is likely to place further pressure on the BoE should figures print as expected. The BoE’s meeting on Thursday could drive further movement in Sterling depending on their final decision.
Australia will see further consumer confidence figures for December tonight, which are forecast to fall in the face of the Omicron variant. Composite Flash PMIs on Wednesday are forecast to show a slight fall across all sectors, although potentially positive employment data on Thursday could help support the ‘Aussie’.

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