AUD/GBP Trend Wavers as Australian Labor Market Stutters: Pound to Australian Dollar News, Outlook

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The Pound to Australian Dollar (GBP/AUD) exchange rate traded in a narrow range on Thursday morning, with the pairing wavering as labour market data from Australia surprised to the downside.

The Australian Bureau of Statistics reported that unemployment in January rose from 3.5 per cent to 3.7 per cent, against expectations of no change from December’s near 50-year low figure of 3.5 per cent. This disappointing news contributed to the Pound to Australian Dollar exchange rate wavering as investors digested the data.

This sharp and unexpected increase in Australia’s unemployment rate was the highest figure since May 2022. Joblessness in the country climbed by 21,900 to 523,200 people out of work, while employment figures declined for a second consecutive month.

Treasurer Jim Chalmers said, “A rise in interest rates in the system has the effect of taking some heat out of the economy, and this has an effect on unemployment.”

“In spite of the fact that unemployment is still near historic lows, we should expect to see a slight increase in the rate.”

The latest employment data and downbeat retail sales figures could signal that the Australian economy is finally beginning to buckle under the weight of the Reserve Bank of Australia’s (RBA) recent interest rate hikes.

Meanwhile, the Pound felt pressure from softer-than-expected inflation data from the UK. The latest reading has left markets uncertain about any chances of the Bank of England BoE raising interest rates in 2020.

Economists at Commerzbank said, “During its last meeting, the BoE showed itself to be more cautious about raising rates further. Weaker inflation figures may be all that’s needed to signal a pause in interest rate hikes. Due to this, we consider the Pound to be weaker than expected.”

Overall, GBP/AUD exchange rate remains highly sensitive to shifts in risk sentiment as investors and markets continue to digest a range of soft economic data from both countries. With slight improvement on either side, the future outlook for GBP/AUD exchange rate looks increasingly uncertain.

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