GBP/AUD Exchange Rate Plummets Following Brexit Chaos and Stronger Australian Employment Figures
The Pound Australian Dollar (GBP/AUD) exchange rate has plummeted, tumbling over 2% this morning following yet another resignation from a key member of Theresa May’s Cabinet.
Sterling’s woes intensified this morning, due to two resignations from Theresa May’s inner circle – including Brexit Secretary Dominic Raab – despite May’s apparent success in convincing her Cabinet colleagues to back her deal yesterday.
Even without any political news, AUD was on the rise against GBP as a surge in Australian employment from 7,800 to 32,800 in October surprised traders, who had been expecting the forecast 20,000.
Brexit Minister Dominic Raab’s Resignation Rocks GBP/AUD Exchange Rate
The Pound Australian Dollar (GBP/AUD) exchange rate has plummeted following yet another shock resignation of a member of Theresa May’s cabinet, Dominic Raab.
Raab, the Brexit Secretary, stated that he ‘cannot in good conscience support [May’s draft Brexit agreement.]’
With many suggesting it will be difficult to remain optimistic on Sterling in the short term, the Pound has fallen -2% against the ‘Aussie’ today.
The first resignation of the day came from Shailesh Vara, the Minister of State for Northern Ireland, who stated he could not support May’s agreement, as it ‘leaves the UK in a halfway house with no time limit on when we will finally be a sovereign nation.’
Record Number of Australians in Employment Causes GBP/AUD to Slump
The Pound Australian Dollar (GBP/AUD) exchange rate also took a hit as figures from Australia showed a surge in employment.
A record number of Australians are now in employment, as the proportion of working-age people in a job has risen by 0.1% to 62.3%, 0.5% higher from this time last year and the highest ratio since March 2011.
This figure was driven by full-time employment, which rose by 42,300 in October, but with a corresponding decline of 9,500 part-time workers. Callam Pickering, Asia Pacific economist stated:
‘Full-time roles have accounted for 83% of employment growth throughout 2018, after accounting for three-quarters of growth last year […] Australia is creating high-quality roles and that, more than anything, is eating into labour market slack across the country.’
This surge of jobs undoubtedly reflects well on the ‘Aussie’, with unemployment rates also positive as they held steady at 5% despite a forecast of 5.1%.
Brexit Uncertainty and a Hawkish RBA Could Further Dent GBP/AUD Exchange Rates
The short term outlook for the UK currency looks bleak, with more resignations likely to come.
May’s position as Prime Minister could also be challenged in the near future, as she was greeted with shouts of ‘resign’ from MPs in her Brexit statement in the House of Commons, although, as pointed out by FX commentator Jordan Rochester, ‘Theresa May has survived much worse. It’s whether we get a flood of (ministerial) resignations to follow.’
At the same time, given the employment figures out of Australia for October were positive and will likely please policymakers at the Reserve Bank of Australia, this will likely increase their bullish outlook going forwards.
Any such bullishness would likely pile even more pressure on Sterling, causing the GBP/AUD exchange rate to slip further.