Pound Australian Dollar (GBP/AUD) Exchange Rate Recovers Ground on Australian Labour Market Weakness

Underwhelming Australian Labour Market Data Lifts Pound Australian Dollar (GBP/AUD) Exchange Rate

A smaller-than-expected uptick in the Australian unemployment rate was not enough to prevent the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate gaining ground.

While forecasts had pointed towards the unemployment rate rising from 6.8% to 7.1% it only picked up to 6.9% in September.

This suggests that the labour market had not come under as much pressure as anticipated at the end of the third quarter, limiting the downside potential of the Australian Dollar (AUD).

However, as the rise in unemployment was still accompanied by a decline in the national participation rate this quickly dampened any sense of optimism over the economic outlook.

As full-time employment saw a sharper decline than forecast on the month this added to the bearish mood of the antipodean currency.

Latest UK Job Losses Fail to Weigh on GBP/AUD Exchange Rate

Demand for Pound Sterling (GBP) weakened, on the other hand, as a result of the latest announcement of job losses within the UK hospitality sector.

With pub chain Marston’s set to cut over 2000 jobs, thanks to the renewed slowdown in consumer spending and demand, the country looks set for another impending wave of job cuts over the winter.

Even so, this failed to knock the GBP/AUD exchange rate off its positive trend thanks to the UK government’s latest signals on Brexit.

As the government continued to signal its desire to reach a trade deal with the EU, in spite of the passing of its earlier deadline, a sense of optimism returned to GBP exchange rates.

Stronger Chinese Growth Set to Bolster Australian Dollar Demand

Lingering global jitters over Covid-19 could see the Australian Dollar losing further ground in the days ahead, with investors still showing a distinct sense of wariness.

Given that an end to the global crisis still appears distant, thanks to the lack of a vaccine, fears of a renewed global slowdown look set to weigh on AUD exchange rates.

The release of the third quarter Chinese gross domestic product report could stoke fresh volatility for the antipodean currency on Monday, meanwhile.

With forecasts pointing towards the world’s second-largest economy regaining further momentum in the third quarter a renewed sense of risk appetite may give the Australian Dollar a lift.

Lack of UK Data Set to Weigh on GBP Exchange Rate Upside Momentum

Ahead of September’s UK consumer price index report the mood towards the Pound may prove muted.

With no fresh UK data set for release in the next few days the GBP/AUD exchange rate could struggle to hold onto its current trajectory for long.

As long as markets see reason to doubt the chances of the UK economy shaking off the impact of tighter Covid-19 restrictions this should keep the Pound on the back foot.

Unless the UK economy looks set to deliver resilient growth momentum in the second half of 2020 a sense of anxiety over the outlook could see GBP exchange rates trending lower across the board once again.

Louisa Heath

Contact Louisa Heath