Pound Australian Dollar (GBP/AUD) Exchange Rate Dips as Rising Commodity Prices Buoy AUD

GBP/AUD Slips amid Strong Demand for Australian Exports

(Updated 14:45 14/10/2021) The Pound Australian Dollar (GBP/AUD) exchange rate is trading on the back foot this afternoon as rising commodity prices makes the ‘Aussie’ more attractive to investors.

Coal is currently drifting higher today, pushing the key Australian export back towards the two-year high struck earlier this month.

Coupled with a prevailing risk-on mood and broad weakness in the US Dollar (USD), this has bolstered the appeal of the Australian Dollar today.

Meanwhile, whilst it is struggling against the ‘Aussie’ the Pound remains well supported against many of its peers amidst BoE rate hike speculation.

Original article continues below:

Pound Australian Dollar Exchange Rate Close to Two-Month Low

The Pound Australian Dollar (GBP/AUD) exchange rate is mostly rangebound so far this morning, leaving the pairing trading close to a two-month low.

At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8480, virtually unchanged from today’s opening rate.

Australian Dollar (AUD) Steady Following Mixed Unemployment Report

The Australian Dollar (AUD) is trading in a narrow range this morning, following the publication of Australia’s latest labour report.

According to data published by the Australian Bureau of Statistics (ABS), the domestic unemployment rate ticked up from 4.5% to 4.6% in September, as the impact of lockdowns in New South Wales and Melbourne began to be felt.

This beat forecasts that the jobless rate may have risen as high as 4.8% last month, whilst a rise in new full time positions came as a welcomed surprise to AUD investors.

However analysts warn that the headline unemployment figures don’t tell the whole story, as it does not truly reflect those who are not active in the labour market during these lockdowns.

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

‘The low national unemployment rate continues to reflect reduced participation during the recent lockdowns, rather than strong labour market conditions.

‘Over the past three months, participation in the labour force has fallen by over 330,000 people, with employment falling by 281,000 people and unemployment falling by 53,000 people.’

Meanwhile, the upside potential of the Australian Dollar was also limited by the publication of China’s latest CPI figures, as a slowing of inflation raises concerns over economic activity in Australia’s largest trading partner.

Pound (GBP) Subdued as Brexit Back in the Headlines

At the same time, the Pound (GBP) is struggling to find any meaningful support this morning amidst some renewed uncertainty surrounding Brexit.

This comes after the EU released its proposals for altering the Northern Ireland protocol, which includes a reduction on border checks on goods, a major point of contention.

However the EU’s olive branch comes a day after UK Brexit minister David Frost suggested the protocol is not fit for purpose and that it should be torn up and rewritten.

The UK and EU will now hold three weeks of talks in an effort to reach a solution, but GBP investors fear these could be unsuccessful and lead to trade tensions between the pairing.

Pound Australian Dollar Forecast: BoE’s Tenreyro in the Spotlight

Still to come today is a scheduled speech by Bank of England (BoE) policymaker Silvana Tenreyro, which could offer fresh direction to the Pound Australian Dollar (GBP/AUD) exchange rate later this morning.

Tenreyro is generally considered one of the more dovish members of the BoE’s Monetary Policy Committee (MPC), so should she echo her colleagues’ recent comments warning about rising inflation it could be seen as a significant shift and another signal that the BoE could hike interest rates before the end of the year.

Meanwhile, in the absence of any more notable AUD data releases through the second half of the week is likely to see movement in the Australian Dollar primarily dictated by market sentiment, potentially bolstering AUD demand if the mood remains broadly upbeat.