GBP AUD Higher Despite Australian Jobs Improvement 

The GBP AUD exchange rate was 0.07% higher after the latest employment figures for the Australian economy were better-than-expected. The country’s unemployment rate also shrank to only 3.5%, but that was not enough to dent the pound sterling. In the UK, Rishi Sunak and Penny Mordaunt led the race for the UK leadership. 

The GBP to AUD rate is at 1.7600. It could increase, if robust Australian data does not hurt the pair. 

Aussie unemployment rate hits a 48-year low

Australia’s unemployment rate dropped to a record low in June as the jobs market defied expectations. Record vacancies also revealed some slack in the market, which will keep pressure on interest rates from the RBA. 

The latest numbers from the Australian Bureau of Statistics on Thursday showed that net employment surged by 88,400 in June. Traders were only expecting a rise of 20,000. 

The unemployment rate dropped to 3.5% from 3.9%, which was also much better than the 3.8% forecast and was the lowest since 1974. The latest drop came despite more people joining the job market. The participation rate was higher at a record high of 66.8%. 

The dive came even as more people went looking for work, with the participation rate climbing to 66.8%. 

“These flows reflect an increasingly tight labour market, with high demand for engaging and retaining workers, as well as ongoing labour shortages,” the ABS said. 

They also noted that the number of unemployed now matched the number of vacancies. “This equates to around one unemployed person per vacant job, compared with three times as many people before the start of the pandemic”. 

In other data, consumer inflation expectations dropped to 6.3% from 6.7%, giving the pound a boost based on interest rate expectations. 

Mordaunt and Sunak stretch away from other candidates

The UK’s Conservative party will hold another vote on Thursday as they move closer to selecting a new leader. Thursday’s vote will remove one of the six contenders from the race. 

Rishi Sunak leads with 88 votes on Wednesday; while Penny Mordaunt got 67 and Liz Truss grabbed third with 50 votes. 

However, a YouGov poll of Tory grassroots members who will make the ultimate decision suggested that Mr Sunak would be defeated in a run-off against either Mordaunt or Truss. More votes are set for Monday and Tuesday as the numbers reduce. 

The pound sterling may rally once the leadership race is resolved. Rishi Sunak, as the previous Chancellor, could weigh on the pound if he becomes Prime Minister because he didn’t offer enough support to the economy in light of price pressures.  

The pound sterling versus the Australian dollar has no more data released this week, and the pair could settle near 1.7600. 

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