The AUDGBP exchange rate was trading at new lows for the year after the release of UK employment data showed wages and hiring picking up. The unemployment rate also dipped below the 5% level to 4.8% as the country continues to reopen from the government lockdowns.
The AUD to GBP pair trades at 0.5367 with the Aussie being weighed by the Sydney lockdown.
UK employment data boosts sterling
The pound got a big boost from the latest employment figures, which showed the number of British workers in employment was half a million more than a year ago. Weekly earnings were also on the rise with a 7% year-on-year gain.
The June rise to 28.9 million is the largest since the start of the pandemic, according to the Office for National Statistics. But the figure is still 206,000 below the level seen in February 2020. The ONS also reported that the unemployment rate had fallen to 4.8%, down from 5% in the previous quarter.
The number of job vacancies in Britain also jumped higher than pre-pandemic levels with 862,000 jobs available between April and June, which was nearly 40% higher than the previous quarter. The majority of these jobs were in the hospitality sector with the country moving closer to a full reopening on Monday.
A return to outdoor dining in April and indoor hospitality in May has also seen a boost in demand for workers in the sectors. The UK Chancellor Rishi Sunak cheered the latest figures and said that the UK economy was “bouncing back”.
Aussie employment stalls in June
The second driver of weakness in the Australian dollar versus the pound pair was weakness in the Australian jobs market.
After a surprising 115k jobs added in May, the country saw 29k this month, with analysts’ expecting a reading of 30k. That is disappointing for Aussie dollar bulls with many hoping for an earlier rise in interest rates.
The latest figures were a surprise after job vacancies in Australia rose to record highs in the May quarter at 57% above pre-pandemic levels. Businesses in all sectors were finding it hard to find staff with the borders being closed and that is likely the reason for the latest sluggish number.
The ongoing lockdown in Sydney is also taking its toll with an analyst at the Commonwealth Bank seeing job losses of 200k if the restrictions last for seven weeks or more.
The signs are already ominous with consumer confidence dropping 10.2% in New South Wales and 13.6% in Sydney during only the first week of lockdown. This puts the Australian economy at odds with the UK, where a full reopening is set to happen on Monday and a stronger labour market.
The AUDGBP saw lows of 0.5399 on the 22nd of October 2020 and this would be the next target for the AUD to GBP bears.