The British pound is lower against the Australian dollar on Monday.
- Australia unemployment higher than expected (7.1%)
- Bank of England adds £100B in bond buying, keeps rates at 0.1%
- Arizona becoming new ‘coronavirus hotspot’
- Pound-Aussie exchange rate is -0.71% this week
GBP/AUD was down by 89 pips (-0.49%) to 1.8146 as of 4pm GMT.
The currency pair reached a high of the day of 1.83 but later slid below 1.81 before bouncing. Yesterday it fell -0.06%.
GBP: Bank of England adds to QE
The Bank of England was a little more optimistic about the extent of the UK economic downturn than they were at the May meeting. Nonetheless policymakers saw the need to top up the quantitative easing (QE) i.e. bond-buying program by £100 billion. The rate of bond-buying has decreased lately but the increased sized of the program will ensure it can increase if needed, or just carry on long enough past the recession to aid the economy/markets.
The policy change was mostly as expected from the Bank of England but the British pound fell anyway as broader markets declined.
A sharp increase in coronavirus cases in Arizona is fast seeing the US state become the next ‘hot spot’ for the pandemic. The daily increase in cases was 2,519 – a gain of 6.2% and a new record. There were 32 new deaths confirmed. Total cases now number 43,443.
AUD: Australia unemployment rate rises above 7%
Australian unemployment increased by more than expected in May. It demonstrates the economic damage done by lockdown policies, even without a high number of coronavirus cases. The change in employment was -227,700 instead of -125,000. That left an unemployment rate of 7.1%, which was actually flattered by a lower participation rate.
The growth of new US jobless claims continue to come down, but remain stubbornly over a million per week- much higher than at any time during the 2008 financial crisis or Great Recession. Initial jobless claims were 1,508,000 versus an estimate of 1,290,000. Continuing claims total 20,544,000 versus the 19,850,000 estimate.
