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As the European session kicked off on Monday, the Pound Australian Dollar (GBP/AUD) exchange rate saw an uptick amid a prevailing risk-off sentiment. The ongoing military strike by Israel in Gaza and heightened tensions between China and the US contributed to a cautious trading environment, tempering traders’ optimism.
As of the latest update, the GBP/AUD is trading at A$1.9112, reflecting a gain of over 0.3% within the past hour.
Pound (GBP) Faces Challenges as Employment Dips Amid Economic Struggles
The Pound (GBP) encountered resistance against several currency counterparts at the beginning of the week, fueled by data from recruiter Morgan McKinley indicating a 38% decline in job vacancies within the finance sector throughout 2023. Escalating market turbulence and inflationary pressures prompted cost-cutting measures by employers, resulting in a significant 42% decrease in jobs during Q4 – the most substantial drop since the 2008 global financial crisis.
Hakan Enver, Managing Director at Morgan McKinley, commented on the situation, stating, “After a year of strong pay growth and over-hiring driven by a tight labour market, signs of a cooling market emerged as we approached the end of a challenging year. We saw a decrease in job seekers, candidate supply, and the number of jobs available.”
The Pound’s performance was also influenced by broader currency dynamics, with the US Dollar (USD) grappling with renewed expectations of an imminent interest rate hike. Despite the Bank of England (BoE) adopting a hawkish stance, resulting tailwinds for the Pound remained relatively limited.
Australian Dollar (AUD) Faces Resistance Amidst Geopolitical Tensions
The Australian Dollar (AUD) encountered challenges on Monday, with geopolitical tensions limiting gains for risk-on currencies. The humanitarian crisis in Gaza, resulting from Israel’s military actions, drew international attention. South Africa accused Israel of genocide at the International Court of Justice (ICJ), adding to the complexity of the situation. Additionally, ongoing political and economic disruptions, coupled with inflationary pressures and restrictive interest rates, posed hurdles for the Australian Dollar.
In Australia, an annual decline in job advertisements contributed to dampened morale, indicating employment challenges amid cost pressures faced by employers. Callum Pickering, a senior economist at Indeed, noted that the annual decline in job ads was broad-based across occupations, though a majority remained above pre-pandemic levels.
Meanwhile, tensions between China and Taiwan, following a statement from US Secretary of State Anthony Blinken, also impacted the Antipodean currencies due to their close trading relationship with China.
GBP/AUD Forecast: Data Releases and Global Conflicts to Influence Exchange Rates
The Pound Australian Dollar exchange rate may be influenced by the release of Australia’s consumer confidence index from the Westpac-Melbourne Institute, with potential gains for the ‘Aussie’ if confidence improves as expected. However, ongoing global conflicts, both physical and political, are likely to limit AUD gains. Additionally, geopolitical tensions may escalate as the US and UK intervene to prevent oil blockades across the Red Sea.
