Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Makes Gains as Unemployment Jumps to 7.5%
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate edged up by around 0.3%. This left the pairing trading at around AU$1.8263.
Australian employment jumped once again in July to 7.5% while the latest jobless rate was lower than forecasts.
However, this was still not enough to offset the rising number of Australians looking for work as the unemployment rate ticked up to a 22-year high.
The latest data from the Australian Bureau of Statistics (ABS) showed employment rose by 114,700, surpassing expectations of a 40,000 jump. This followed a surge of 210,800 new jobs added in June.
Australia has been one of the few countries with a lower number of coronavirus cases and deaths. This allowed most states and territories to reopen in late May.
However, the second wave of the virus in Victoria has marked an unwelcome setback and weighed on ‘Aussie’ sentiment.
According to Ben Udy, analyst at Capital Economics:
‘The pick-up in employment in July is likely to be unwound in the coming months as the stricter lockdown in Victoria weighs on the labour market.
‘[…] the stalling in business and consumer confidence suggest that the recovery in other states is running out of steam.’
Sterling (GBP) Boosted as UK Steps Up Demands on US Tariffs
The Pound was able to make gains against the Australian Dollar just a day after British GDP data revealed the country had plunged into a recession.
The latest data showed growth contracted by over 20%, making this the worst contraction on record. This was also the steepest decline in any major economy due to the coronavirus pandemic.
Meanwhile, on Thursday Britain said it would step up demands for the US to drop tariffs on a range of goods.
On Wednesday, the US government noted it would maintain 15% tariffs on Airbus and 25% on other European goods. This is part of a long-running trade dispute, however Washington held off on adding extra tariffs it had threatened.
Britain’s Trade Secretary Liz Truss welcomed the absence of fresh tariffs, but raised the whisky issue with US counterpart Robert Lighthizer.
The industry has warned that tariffs on single malt Scotch whisky would put its future at risk. The Scotch Whisky Association noted exports to the US had slumped -30% since the tariffs came into force.
In a statement issued today, Truss said:
‘These tariffs damage industry and livelihoods on both sides of the Atlantic and are in nobody’s interests. I am therefore stepping up talks with the U.S. to remove them as soon as possible.’
After leaving the European Union, Britain has tried to swiftly tie up trade deals with major partners such as the US. But the country has still been affected by tariffs.
Pound Australian Dollar Outlook: RBA Lowe Speech in Focus
Looking ahead, the Australian Dollar (AUD) could slide against the Pound (GBP) following a speech from the Reserve Bank of Australia’s (RBA) governor.
If Governor Philip Lowe is overly dovish and highlights the risks o the second wave in Victoria, it will weigh on the ‘Aussie’.
However, the pairing could be left flat if the latest Aussie new home sales data impresses investors and surges for the second month in a row.
If HIA’s data showed July’s new home sales surged more than expected it will offer AUD some support. This could leave the Pound Australian Dollar (GBP/AUD) exchange rate largely muted.