GBP/AUD is surging on Thursday, moving inside a bullish channel that started on February 6.
Currently, GBP/AUD is trading at 1.9440, up 0.49% as of 7:30 AM UTC. Yesterday, the price fell by a similar margin.
GBP/AUD: Australian Unemployment Surprisingly Increases
The Aussie started to decline against majors after the Australian Bureau of Statistics (ABS) said that the unemployment rate rose to 5.3% last month from 5.1% in December, while analysts expected a slight increase to 5.2%. Thus, the central bank might be forced to consider another cut in the interest rate that is already at a record low at 0.75%.
However, the increase in jobless rate comes as more people are looking for work and not because of jobs cuts. In fact, employment rose by 13,500, with the creation of 46,200 full-time jobs offsetting the loss of 32,700 part-time positions.
The Reserve Bank of Australia (RBA) said on multiple occasions that it would ponder further rate cuts if unemployment increases in a significant way, though it openly admitted that it would be happy to support a stable policy. Last year, the central bank cut the rate three times.
Gareth Aird, an economist at CBA, commented:
“The leading indicators of employment have softened and the activity data continues to paint the picture of soft private demand. We remain comfortable with our view that the RBA will resume policy easing in 2020. April looks the most likely month for the next 25 bps rate cut.”
Besides the jobless rate, another important indicator that shows signs of trouble is the so-called under utilization rate, which touches upon the unemployment rate as well as the number of those who have work but not enough. This indicator rose to 13.9% on a seasonally adjusted basis, which is the highest since April 2018.
Former RBA economist Callam Pickering explained:
“The underutilisation rate has a strong relationship with wage growth and the increase suggests that wage growth could soften from its already low levels.”
The Aussie couldn’t be helped by China’s decision to cut its interest rate, which was a widely expected move. Instead, the AUD might extend its losses on fresh worries that the coronavirus outbreak is growing outside China, with South Korea reporting more new cases than ever.