The AUDGBP exchange rate was 0.32% higher on Thursday despite a drop in Australian employment. The latest figures have shown that the end of wage subsidy scheme has seen hiring soften. The pound has been unable to capitalise as traders focus on the spread of the Indian virus variant.
The AUD to GBP rate trades at 0.5487 after seeing a new low for the year yesterday.
JobKeeper end sees job losses
Australian employment dropped in April, which was the first full month after the JobKeeper wage subsidy scheme ended, but the unemployment rate also fell as fewer people looked for work. The economy lost 30,600 positions, led by a 64,400 drop in part-time roles, despite expectations of a 15k gain.
The employment numbers have ended a run of hiring increases and may be a risk for countries such as the UK as it seeks to wind back the support for workers in September.
“The decline coincided with the expiry of temporary wage-subsidy stimulus, but seasonal factors were the key driver of the weakness. We expect a return to employment growth over coming months, based on forward-looking indicators of labor demand,” James McIntyre, a Bloomberg economist said.
The RBA saw the jobless rate falling to 5% by the end of this year and 4.5% at the end of 2022, with the latest unemployment number being at 5.5%.
Sterling loses support on Indian virus
The pound sterling is losing support against the Aussie dollar after a rise in the Indian virus variant in the country. The UK’s Health secretary Matt Hancock told MPs yesterday that surge testing and vaccine supplies were being increased in particular areas of the country to get ahead the virus variant.
Labour has criticized the government for its odd open borders policy saying that the country has been “like a sieve” throughout the entire pandemic. Yesterday it was reported that 110 direct flights had entered the UK from India despite the media hype surrounding the spread in India.
Mr Hancock said there was around 3,000 cases of the Indian strain, which was up 27% from Monday.
“The race between the virus and the vaccine has got a whole lot closer,” Hancock told Mps.
Sterling has failed to capitalise on stronger inflation numbers after the reopening led to input prices jumping 9.9% for the year to April. That was compared to expectations for a 4.4% rise, but the Bank of England governor Andrew Bailey insists that the increase is only a temporary blip for prices.
“Now, our judgement at the moment is that it will because we see the bounce back in the economy but we don’t see that sort of, in a sense, momentum continuing forward at that pace at all,” Bailey told the Economic Affairs Committee.
The AUDGBP pair is looking to mark a bottom in price at the same level as the April 1st lows for the year, which were eclipsed on Wednesday.