GBP/AUD Exchange Rate Muted as UK PMI Highlights Significant Jobs Losses
The Pound to Australian Dollar (GBP/AUD) exchange rate briefly struck a new two-month high this morning, before falling back amidst concerns over the UK jobs market.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8381, virtually unchanged from this morning’s opening rate.
Pound (GBP) Fails to Accelerate on Bumper PMI Reading
The Pound (GBP) is stuck in a narrow range against the Australian Dollar (AUD) and majority of its other peers this morning, following the publication of the UK preliminary PMIs for August.
According to data published by IHS Markit, the UK’s composite PMI printed at 60.3 in August, jumping from 57.0 in July and beating forecasts of a modest rise to 57.1.
While GBP investors welcomed the continued pick up in UK economic activity this month, underlying concerns over the UK’s recovery from its coronavirus slump stifled any gains in Sterling.
Flash UK #PMI registered 60.3 in August and signalled the sharpest increase in private sector output since October 2013. Job cuts continued at an accelerated pace, however, amid concerns about the speed and duration of the recovery. Read more: https://t.co/0ZS73xsHRD pic.twitter.com/iTKbNoJvEV
— S&P Global PMI™ (@SPGlobalPMI) August 21, 2020
Tim Moore, Economics Director at IHS Markit, comments:
‘Survey respondents often noted that it could take more than a year to return output to pre-pandemic levels and there were widespread concerns that the honeymoon period for growth may begin to fade through the autumn months.’
However even more alarming is that the indexes revealed that the rate of job losses continued to gather pace in August, stoking concerns that the UK faces an impending employment crisis.
Moore added:
‘Private sector firms reported another sharp fall in employment numbers as scarring from the pandemic and lingering doubts about the sustainability of recovery resulted in a need to cut overheads.
‘The rate of job shedding accelerated since July, with survey respondents frequently noting that redundancy programmes had been running in tandem with efforts to return some staff from furlough.’
Australian Dollar (AUD) Supported by Robust Retail Sales Figures
At the same time, following on from Thursday’s sharp sell-off, the Australian Dollar (AUD) has been able to stabilise in early trade today thanks to Australia’s latest retail sales figures.
Preliminary data from the Australian Bureau of Statistics (ABS) revealed that sales growth rose by 3.3% in July, despite concerns that strict lockdown measures in the state of Victoria could drag on sales growth.
The figures were cheered by AUD investors, who are hopeful that they point to a robust economic recovery.
GBP/AUD Exchange Rate Forecast: Brexit Still in Play
Meanwhile, the Pound to Australian Dollar (GBP/AUD) exchange rate could still be met by additional volatility before the end of this week’s session as the latest round of Brexit talks come to a close.
This could cast Sterling lower if progress in negotiations remains limited.
Meanwhile, the Australian Dollar could also face some pressure in the second half of today’s session if market sentiment continues to sour.