Pound Australian Dollar Exchange Rate News: GBP/AUD Climbs as UK Unemployment Drops to Pre-Pandemic Levels

March 15, 2022 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Climbs as UK Unemployment Drops to Pre-Pandemic Levels

GBP/AUD Boosted as UK Unemployment Rate Exceeds Expectations

The Pound Australian Dollar (GBP/AUD) exchange rate is climbing during today’s session after the UK unemployment fell below market forecasts.

At the time of writing, the GBP/AUD exchange rate is trading at approximately AU$1.8106, roughly up by 0.2% from today’s opening levels.

Pound (GBP) Edged Higher in Response to Better-Than-Forecast Unemployment Figures

The Pound (GBP) is climbing against the Australian Dollar (AUD) as UK unemployment dropped to a pre-pandemic levels.

Printing at 3.9% in January, UK unemployment rate dropped markedly from the 4.1% recorded in December and better than the 4% forecast.

Rishi Sunak, the chancellor, is ‘confident’ that the UK’s ‘labour market is in a good position to deal with the current global challenges.’

However, some experts remain wary, with the chief economist at the Office for National Statistics (ONS) stating:

‘…the number of people out of work and not looking for a job rose again, meaning total employment remained well below its pre-pandemic level.’

Also supportive of Sterling were the accompanying average earning figures, which reported a stronger-than-expected uptick in wage growth over the same period.

The figures are likely to support further tightening of monetary policy by the Bank of England (BoE) on Thursday, with an interest rate hike from 0.5% to 0.75% largely priced-in.

Furthermore, as the Russia-Ukraine war enters its third week, cautious optimism is underpinning improved risk sentiment after Volodymyr Zelenskyy’s advisor declared ongoing peace talks could yield ‘a positive result’ within a few weeks.

Australian Dollar (AUD) Stumbles Following Renewed Outbreak of Coronavirus in China

The Australian Dollar (AUD) is slipping against the Pound (GBP) today as downbeat Chinese sentiment weighs on the ‘Aussie’.

The ‘Aussie’ is a proxy to the Chinese economy, therefore bearish sentiment in China – driven by fresh coronavirus concerns – is placing pressure on AUD.

A new wave of coronavirus is sweeping across China, with case numbers tripling over the weekend, causing the Chinese government to lock down Shenzhen.

However, China’s downbeat unemployment figures are further undermining the ‘Aussie’s potential. February’s figures printed at 5.5%, up from January’s 5.3% and market forecasts for a drop to 5.1%. This is the highest jobless rate in a year.

Furthermore, the minutes from the Reserve Bank of Australia’s (RBA) March policy meeting undermined AUD investors’ rate hike bets.

The RBA meeting minutes noted:

‘…the global economy was continuing to recover from the pandemic. However, the war in Ukraine was a major new source of uncertainty.

‘The Australian economy remained resilient and spending was expected to pick up further after the Omicron outbreak.’

GBP/AUD Exchange Rate Forecast: Russia-Ukraine War to Continue Dominating Headlines

The Ukraine crisis is likely to remain the key influencer of the Pound Australian exchange rate for the short-term. Should a diplomatic solution be found in the near future, it may bolster the risk-sensitive Pound.

Later in the week, the Bank of England (BoE) is scheduled to deliver its next interest rate decision. The expected rate hike of a quarter of a percentage – from 0.5% to 0.75% - may provide GBP with some additional support.

On the other hand, the ‘Aussie’ may be boosted by Australian latest jobs report, which is expected to report domestic unemployment fell from 4.2% to 4.1% in February.

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