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GBP/AUD Exchange Rate Loses Ground after Australian Unemployment Rate Surprise

Last week’s high: AU$1.8560

Last week’s low: AU$1.8240

Australian Dollar (AUD) Exchange Rates Benefit From Lower Unemployment Rate

Investors were caught off guard as Australia’s unemployment rate unexpectedly fell in September, easing from 5.3% to 5.0%.

However, this sharp decline in unemployment was ultimately driven by a slump in the participation rate, meaning that fewer Australians are now active within the labour market.

Even so, the Australian Dollar was still encouraged to trend higher in the wake of the data thanks to a wider sense of market risk appetite.

Further pressure was put on the GBP/AUD exchange rate as Brexit negotiations hit an impasse ahead of the October EU summit.

As the two sides failed to reach an agreement on the issue of the Irish border the mood towards the Pound deteriorated.

Market hopes of an imminent deal rapidly faded, exposing GBP exchange rates to additional losses as the odds of a no-deal Brexit picked up once again.

AUD Outlook: Hawkish RBA Comments Could Boost Australian Dollar

If the ANZ Roy Morgan weekly consumer confidence index shows an improvement this could give AUD exchange rates a boost.

Commentary from Reserve Bank of Australia (RBA) policymakers may also shore up the Australian Dollar this week, provided they maintain a more optimistic outlook.

As long as investors see incentive to price in higher odds of a 2019 interest rate hike the GBP/AUD exchange rate may struggle to regain its recent losses.

Worries over Brexit are equally likely to weigh down the Pound over the coming days, unless there are signs of progress towards a deal.

Any worsening in relations between UK and EU officials, however, may push the GBP/AUD exchange rate sharply lower.

October’s CBI business optimism index is not expected to offer GBP exchange rates any support, with forecasts pointing towards a fresh decline.

 

Key Events

22nd October

23:35   Australia ANZ Roy Morgan Weekly Consumer Confidence Index (Oct 21)

23rd October

11:00   UK CBI Business Optimism Index (Oct)

 

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To keep up to date with the Australian Dollar, visit the AUD blog in our Currency News section.

Alastair Archbold

Currency Dealer

aja@fcgworld.co.uk

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