The AUDGBP exchange rate was higher by 0.11% on Thursday after the latest update on jobs saw another drop in the unemployment rate. The country’s Prime Minister Scott Morrison hailed the figures as “truly remarkable” as almost 90,000 Aussies found new work in the latest month.
AUDGBP touched the stubborn 0.5600 level on the release but is still trading 10 pips below that level.
More Aussies in Work than before the Pandemic
Australian jobs data from the Australian Bureau of Statistics (ABS) saw almost 90,000 jobs added to the economy and a whopping 0.5 percentage points knocked off the expected unemployment rate.
There are now more in work than before the virus unfolded and Prime Minister Scott Morrison said:
“That is something that is truly remarkable and is a great credit to every Australian who hung in there, every Australian business who kept people in jobs, everyone who played a role in ensuring that we did everything that we possibly could to see that Australia continues to come through this COVID-19 pandemic and recession in the best way that we possibly can.”
The numbers are a huge boost to the economy just days before the country’s JobKeeper furlough scheme is wound down. Morrison re-affirmed that plan, saying, “JobKeeper must come to an end. It has done its job”.
Another Headache for the RBA
The numbers are a boost for the Australian economy but may give the Australian central bank another headache. The bank recently told markets that they would hold rates lower through 2023-24 as it pursues employment and inflation targets.
The RBA will now have a job on its hand to play the dovish central banker card with the economy heating up again. There is no way the bank will be able to defend 0.1% rates into 2024 and markets will soon wake up to that reality.
The RBA’s counterparts will have the podium today as the Bank of England update markets on their own policy measures and interest rate. The rate will stay on hold, while the bank will likely hold its bond buying plan at the current level.
The UK should be on the path to reopening further in the weeks ahead and that is keeping a lid on the Australian dollar to pound rate. Once it does reopen, the potential for rates in Australia to rise more quickly could be a feature in the pair.
Recent data from the British economy has been mixed with decent growth figures for the fourth quarter, but a hit to exports in January from the new Brexit arrangements. The UK may have some teething problems as it adjusts to a new reality and this can also boost the Aussie currency outlook. If we see inflation rising in the economy then the RBA will be forced to change their 2024 rate plan.
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