GBP AUD Higher Despite Disappointing GDP Figures

GBP AUD at Risk of Further Losses Ahead of Data

The GBP AUD exchange rate was higher despite disappointing GDP figures for the UK in the latest quarter. Traders were looking for reading of 1.5% for the quarter to September but the actual result was 1.2%. I noted recently the Bank of England had lowered its forecast for growth at last week’s meeting and that would buffer prices. Australian unemployment was 0.4% percentage worse off than expected.

The GBP to AUD trades at 1.18320 but the Aussie could still find further strength.

UK economy closer to pre-pandemic output level

The UK economy is close to recovering its pre=pandemic levels of output, with city analysts applauding the recovery.

Official figures showed the economy growing at 1.3% between July and September. That was lower than expected and well behind the 5.5% spurt enjoyed in the second quarter as the nation bounced out of lockdown.

But the 0.6% growth in September was better than forecast, offering hope that October and November will also be strong. The UK is now on track to see growth where it was prior to the pandemic at the end of 2019.

Supply issues were blamed for much of the weakness with car sales held back by chip shortages and builders struggling to find construction materials,  while tough trading for retailers also hit the country’s growth prospects.

Growth in the UK’s dominant services sector – representing four-fifths of output – was limited by weak consumer spending after successive months of decline in retail sales.

Chancellor Rishi Sunak said:

“The economy continues to recover from Covid and thanks to schemes like furlough, the unemployment rate has fallen for eight months in a row, and we’re forecast to have the fastest growth in the G7 this year.”

Australian jobs market sees unemployment at higher rates

The Australian jobs market was worse than traders expected and provides an uphill battle for the country to escape the lockdown damage.

The Australian unemployment rate came in at 5.2% despite expectations of a 4.8% print. Alongside the -46k jobs it was a blow for Aussie bulls. The market had expected the economy to add 50k jobs despite the lockdown.

Pushing the jobless rate higher was an increase in some states of the number of people looking for work, with the so-called participation rate rising from 64.5% in September to 64.7% last month.

The country’s treasurer and the Prime Minister had cheered 13-yr highs in job advertising only a day earlier and will be feeling less bullish today.

“In contrast, while Victoria’s unemployment also increased, by 29,000 people, employment fell by a further 50,000, with their participation rate falling by 0.4 percentage points,” Bjorn Jarvis, head of labour statistics at the ABS, said, saying that the workforce also remained 113,000 lower than in May.

“It may seem counterintuitive for unemployment to rise as conditions are about to improve,” Jarvis said. “However, this shows how unusual lockdowns are, compared with other economic shocks, in how they limit being able to work and look for work.”