The AUD to GBP exchange rate was flat in Tuesday trading after giving up gains earlier in the session. The pound sterling was showing strength despite the latest UK jobs numbers showing a rise in the unemployment rate to 5%. The gain had been expected but markets took heart from a lower number of jobs lost.
AUDGBP is trading at 0.5640 after a two-week rebound in the pound from the British pace on vaccines.
Pound Employment Levels Still Weak
The British economy is still showing weakness in employment numbers with a further -88k losing their jobs compared to expectations for -100k. The improvement came with a rise in the unemployment rate to 5%, which is the highest level since 2016.
The latest employment figures from the ONS showed the employment rate was down 0.4 points quarter-on-quarter. The payroll numbers were seen as being 828k lower than the pre-virus numbers in February 2020.
The real scale of the economic damage is being masked by the furlough scheme and the latest jobs release sae business groups calling for a further extension to the furlough program.
The AUD to GBP rate has been trading back at levels last seen in July 2019 after the pound strength into 2020 bottomed with the virus. The UK has been hit harder in many aspects by the virus, with its important services sector being demolished by the closure of non-essential businesses and the halt on holidays and travel.
Australian Economy is Coping Well with Trade Issues
Australia’s economy has been showing strength in exports despite a trade spat with China. Australia sold more goods to China in December, particularly iron ore, which is an important commodity to the economy.
China slapped tariffs on some Australian products, including 80% on barley, but the country has been able to divert its shipments to other countries like Japan and India. The country also made its first-ever barley shipment to South America, with Mexico taking up the slack.
Australia saw exports to China up $2.3 billion in December, while imports fell 7%. Australia is heavily reliant on Chinese trade with 40% of the country’s exports moving there. The recent trade diversions will be an opportunity for the country to consider rebalancing some of this trade.
The AUD to GBP outlook is trading in a small range as traders seem cautious about the path forward. The UK economy is being boosted by a vaccination strategy that has seen up to 6 million residents inoculated. This could get the economy back open earlier and bouncing. This is helping the pound to avoid sharper losses against the Aussie dollar.
Sterling is still trying to creep towards the 0.5600 level, which was a level of support in December. With central banks holding off on any further action, it will likely be the virus headlines that control prices for now.
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