Pound Australian Dollar (GBP/AUD) Exchange Rate Steady as Australian Joblessness Rises to 22-Year High in June

GBP/AUD Exchange Rate Rangebound as Australian Unemployment Rises in June

The Pound to Australian Dollar (GBP/AUD) exchange rate held steady this morning, with the pairing currently trading around AU$1.79.

The Australian Dollar (AUD) following the release of the latest Australian unemployment rate report for June, which rose from 7.1% to 7.4%, a 22-year high.

‘Aussie’ investors were reassured by Australian’s employment change figure, which shot up from -264.1 thousand to 210.8 thousand, owing to a large increase in part-time employment.

Bjorn Jarvis, head of labour statistics at the ABS, commented:

‘The easing of COVID-19 restrictions in June saw an extra 280,000 people in the labour force, with more people in employment, and more actively looking and available for work.’

Australian Prime Minister Scott Morison added that the increase in employment had showed that the Australian economy is ‘fighting back’.

Meanwhile, the Australian Dollar (AUD) remained unphased by China’s continued return to growth, with the world’s second largest economy being the first to return to growth following the initial peak of the Covid-19 crisis.

Nevertheless, with AUD investors concerned about Australia’s domestic economy’s recovery – with rising fears over unemployment and Covid-19 cases in key cities – the ‘Aussie’ remained under pressure.

Pound (GBP) Steady as UK Unemployment Data Disappoints

The GBP/AUD exchange rate held steady despite reports from the Office for National Statistics (ONS). The ONS reported that 649,000 fewer people were employed in June compared with March.

Jonathan Athow, deputy national statistician at the ONS, commented:

‘As the pandemic took hold, the labour market weakened markedly, but that rate of decline slowed into June, though this is before recent reports of job losses.’

‘There are now almost two-thirds of a million fewer employees on the payroll than before the lockdown, according to the latest tax data.’

Today saw the release of the UK’s ILO Unemployment Rate figure for May, which held at 3.9%. However, this was better-than-expected, with previous forecasts of a 4.2% increase.

Nevertheless, many analysts believe that this does not show the full extent of the UK’s employment crisis.

Resolution Foundation chief economist Mike Brewer says:

‘Britain is in the midst of an unprecedented economic shock that is profoundly affecting millions of people’s jobs.’

‘Unemployment is forecast to hit 4 million for the first time ever. And yet our official data is failing to show the true extent of this jobs crisis.’

GPB/AUD Outlook: Could Improving Risk Sentiment Buoy the ‘Aussie’ This Week?

Any further signs of successful Covid-19 vaccine trials could buoy the risk-averse ‘Aussie’.

AUD could also edge higher if hopes continue to grow for China’s economic recovery. With China being Australia’s largest trading partner, this would directly improve prospects for the economy’s recovery from the Covid-19 pandemic.

The GBP/AUD exchange rate will remain steady through the rest of the week owing to no notable UK economic data. However, investors will be keeping a close eye on Brexit developments and Britain’s economic situation.

David Moore

Contact David Moore