The British pound is higher against the Australian dollar on Thursday with the Aussie being pressured by rising Australian unemployment and ongoing uncertainty about the true economic effect of the coronavirus on Asia-Pacific economies. Aussie losses were limited by weakness in the pound which is being held back by EU trade uncertainty.
GBP/AUD was up by 35 pips (-0.19%) to 1.9398 with a daily price range of 1.935 to 1.945 as of 3pm GMT. The currency pair was choppy all day with 1.94 as a midpoint. The daily losses bring a weekly total loss of -0.15%.
AUD struck fresh decade lows vs USD while probing the February lows vs Pound
The Australian dollar is under more downward pressure after Australian unemployment rose more than expected to 5.3% in January versus 5.2% expected and 5.1% in December.
The RBA considered cutting interest rates at its last meeting but failed to do so because they are already so low, and the economy appeared to be moving slowly in the direction of inflation and unemployment targets. However, if trade and coronavirus uncertainties prevent the labour market from continuing to improve as previously thought, they may be forced to lower rates in the coming meetings.
The British pound
Brexit uncertainties are well entrenched and so the pound cannot build on last week’s gains despite the improved economic data in the United Kingdom. UK retail sales gained 0.9% month-over-month, higher than the 0.7% expected and bouncing back strongly from the -0.5% contraction in December.
Negotiations between the UK and EU are expected to kick off in March, but the EU is embroiled over big decisions over its own budget post-Brexit. As a result the EU is still deciding what areas of the UK trading relationship it wants to focus on in the deal. EU officials this week continue to talk of the kind of regulatory alignment that Boris Johnson ruled out in his speech after Brexit Day. The EU looks like it wants to apply a different set of standards for the United Kingdom than it did to Canada in any trade deal.
