GBP/AUD Exchange Rate Flat Following Australia’s Job’s Report
The Pound to Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range this morning as markets digest Australia’s latest employment report.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9832, virtually unchanged from this morning’s opening rate.
Stronger-than-Expect Jobs Report Fails to Support the Australian Dollar (AUD)
The Australian Dollar (AUD) is struggling to find support this morning as analysts warned that a surprisingly upbeat domestic jobs report doesn’t quite tell the whole story of how Australia’s economy is faring during the coronavirus crisis.
According to data published by the Australian Bureau of Statistics (ABS) domestic employment growth slowed from 25,600 to just 5,900 in March, but this was still ahead of a forecast contraction of 40,000.
This in turn saw unemployment tick up from 5.1% to 5.2% versus an expected jump to 5.5%.
This article provides a summary of the ABS’ existing and new labour market products and the information they provide to understand the impacts of COVID-19. https://t.co/nZXNooL5oC
— Australian Bureau of Statistics (@ABSStats) April 15, 2020
However, analysts warn that while March’s data is ‘useful as a snapshot’ of how the economy was faring as the coronavirus crisis began it likely masks how employment has stalled in recent weeks.
Asia-Pacific economist Callam Pickering suggests:
‘We know that conditions have deteriorated but we don’t currently have any idea as to how much. Measures of job postings or consumer confidence or business conditions suggest that we are dealing with something that is largely unprecedented since World War 2.
‘Widespread lockdowns will push unemployment significantly higher for April, although limited to some degree by government support packages such as the JobKeeper wage subsidy, with participation in the workforce set to plummet.’
Further capping any upside in the Australian Dollar this morning is the souring of market mood over the past couple of days, with growing fears of a deep global recession greatly limiting the appeal of the risk-sensitive ‘Aussie’.
Pound (GBP) Muted as IMF Calls for Brexit Delay
At the same time, the Pound (GBP) finds itself directionless this morning after the head of the International Monetary Fund (IMF), Kristalina Georgieva called on the UK and EU not to ‘add to uncertainty’ from coronavirus by not allowing for a Brexit delay.
In responding to a question on the prospect of no-deal Brexit this year Georgieva called on cool heads to prevail as not to add to the ‘unprecedented uncertainty’ arising from the current crisis.
Georgieva added:
‘I really hope that all policymakers everywhere would be thinking about [reducing uncertainty]. It is tough as it is, let’s not make it any tougher.
‘My advice would be to seek ways in which this element of uncertainty is reduced in the interests of everybody, the UK, the EU, and the whole world.’
In spite of the coronavirus crisis the UK government has so far ruled out any extension to the Brexit process, and seeks to exit the transition period in December whether a deal is in place or not.
GBP/AUD Exchange Rate Forecast: UK to Extend Lockdown
Looking ahead, it’s safe to assume the coronavirus crisis will continue to act as the main catalyst of movement in the Pound to Australian Dollar (GBP/AUD) exchange rate through the remainder of the week.
Of particular note will be the announcement of an extension to the UK’s coronavirus lockdown expected later this evening.
For GBP investors the focus will be on how long the extension will last and whether the UK government will be willing to share its exit strategy.