• Pound (GBP) recoups losses after GDP data showed -20.4% contraction in Q2 QoQ
  • Positive feedback on US – UK trade talks supports the Pound
  • Australian Dollar (AUD) declines as 1 million Australians are jobless and unemployment rate rises to 7.4%
  • Number of jobs created jumped by 114.7K vs 40k forecast

The Pound Australian Dollar (GBP/AUD) exchange rate is charging higher, paring losses from the previous session. The pair settled on Wednesday -0.4% at 1.8191, significantly down from the high of 1.8332. At 08:30 UTC, GBP/AUD trades +0.4% at 1.8268.

The Pound has recouped its losses from the previous session. GDP data on Wednesday showed that the UK economy contracted by -20.4% quarter on quarter in the three months April – June. This was the deepest contraction since records began and followed a -2.2% decline in the first quarter of the year, pushing the UK firmly into recession.

Positive feedback from trade secretary Liz Truss over trade talks with the US is helping to boost the Pound, on a quiet day data wise.

Aussie Dollar is trading on the back foot following unemployment data. Australian employment surged in July, firmly beating analysts’ forecasts. However, this was still insufficient to offset the rising number of people searching for work, as the jobless rate hit a 22 year high.

According to the Australian Bureau of Statistics the number of people employed in Australia jumped by 114,700, adding to 210,800 new jobs in June as the economy reopened. This was well above the 40,000 increase forecast.

However, the unemployment rate increased to 7.5% in July, up from 7.4% as 1 million people were out of work, in a first for the nation.  Unemployment is expected to reach 10% in the coming months.

Fears are growing that the resurgence of coronavirus cases in the state of Victoria and the reimposed lockdown restrictions in Melbourne will mean that this pick up in employment in July will be unwound in the coming months and unemployment will rise. The August labour market data will provide the first indication of the impact of the renewed lock down restrictions on the labour market.