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Pound Touches 3-Week High Versus Aussie, as AU Job Market Wobbles

Market CommentaryPound Touches 3-Week High Versus Aussie, as AU Job Market Wobbles
Pound Touches 3-Week High Versus Aussie, as AU Job Market Wobbles
Image credit: Bianca Copal.

Welcome to Pure FX's latest update of the pound to Australian dollar interbank exchange rate. This tells you when it's an excellent time to exchange pounds to Australian dollars for your money transfer!

Sterling climbs a notch versus the Aussie! The pound to Australian dollar interbank exchange rate has hit 1.7736 today, its highest in 3 weeks, or since May 24th.

If you intend to transfer money from the UK to Australia, perhaps to emigrate or buy a property Down Under, it's hence a better time to do so than any time so far this month. This is because you'll get far more Aussie dollars.

Pound Rises Versus Aussie, as AU Labour Force Participation Sinks

The pound has strutted its stuff against the Australian dollar, because Australia's job market went wobbly at the knees in May, according to official data released last night.

In particular, even though Australia's unemployment rate fell -0.2% to 5.4% last month, said the Australian Bureau of Statistics (ABS), Australia's labour force participation rate also tumbled -0.1%, to just 65.5%.

This has weakened the Australian dollar, because this tells us that joblessness in the land of kangaroos fell in May, because fewer Australians were in the job market, actively looking for work.

Aussie Dollar Declines, as Australia Sheds Full-Time Jobs in May

The Australian dollar has also lost out, because Australia's employment change jumped by just +12,000 last month, according to the ABS, below financial market forecasts for +18,000.

To be specific, -20,600 fewer Australians had a full-time job in May, while +32,600 more Aussie citizens found part-time work.

This has weighed on the AU dollar, first, because this tells us that Australia's economy created fewer jobs than predicted by the financial markets in May. This has also dragged down the Aussie, because all the new jobs were part-time, and so lower quality too.

Australian Dollar Falls, as Australia's Wage Growth to Stay Low

These job market statistics have clipped the Australian dollar's wings, because they paint a tepid picture of Australia's economy.

In particular, with fewer Australians in the job market, AU companies will feel less pressure to pay their employees more. Wage growth in Australia reached just +2.1% between January and March 2018, half the figure during Australia's mining boom in the early 2000s.

In turn, when Australians have lighter wallets, they're likely to spend less, thus putting the brakes on Australia's GDP growth. This could be a downer on the Australian dollar too.

AU Dollar May Fall Further, as RBA to Keep Rates at Just 1.5%

In addition, with Australia's job market slowing, the Reserve Bank of Australia (RBS) looks likelier to keep interest rates at record-lows of 1.5%, where they've been sat since August 2016.

For instance, according to CommSec's chief economist Craig James, "Rates will remain on hold until there is firm evidence that skill shortages are leading to broader-based increases in wages."

In turn, lower Australian interest rates make investing in Aussie assets less profitable for international money managers. This cuts demand for the AU dollar, and thereby keeps the Australian dollar weak.

With all this in mind, the pound to Australian dollar interbank exchange rate has hit this 3-week high today, and could continue to climb!

As I mention, this makes this a fantastic time for you to transfer money from the UK to Australia, as you'll receive a superior Australian dollar total. Make the most of this excellent exchange rate while it's available, before the exchange rate shifts!

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You’ll get an outstanding pound to Australian dollar exchange rate for your money transfer!

Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or email [email protected]

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