GBP/AUD Exchange Rate Flat as UK Employment in Focus
The Pound to Australian Dollar (GBP/AUD) exchange rate is buoyant this morning, but how long can Sterling hold its ground amid mounting evidence of an impending jobs crisis in the UK.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8221, virtually unchanged from this morning’s opening rate.
M&S Job Cuts Highlight UK’s Impending Unemployment Crisis and Challenges Facing the Pound (GBP)
While the Pound (GBP) is currently holding its ground against the Australian Dollar (AUD), will Sterling be able to cling to its recent gains in the face of a mounting unemployment crisis in the UK?
The UK’s jobs market is back in focus this morning following the announcement that high street staple Marks and Spencer will cut 7,000 jobs over the next three months.
While M&S has be struggling for some time, the coronavirus crisis has accelerated the need for the company to reposition its business.
But this is not a trend that its unique to M&S, and analysts warn that more retailers and other businesses will be looking to make major job cuts in the coming months as the government’s furlough scheme expires in October.
Richard Lim, CEO of Retail Economics, comments:
‘Retailers were already battling with the pace of structural change facing the sector but the impact of the pandemic has been a step-change for the industry. Retailers remain in survival mode, preserving cash and hanging on for more sustainable levels of demand to return. But the way we shop has changed on a permanent basis for many parts of the sector almost overnight.
‘The reality is that many more retailers will fail and the number of job losses will ramp up as government support is withdrawn. This is the calm before the storm.’
With fears unemployment in the UK could even reach double figures by the end of 2020, its likely we could see demand for the Pound tempered through the third quarter.
Australian Dollar (AUD) Undermined by Australia-China Trade Tensions
The Australian Dollar (AUD) meanwhile, is facing some pressure this morning amidst reports that China is planning to impose more tariffs on Australian exports.
Australian wine exports are apparently in the crosshairs of Beijing after China’s commerce ministry announced it is opening an ‘anti-dumping’ investigation into wine imports.
This follows on from China’s imposing of tariffs on 80% of Australian barley imports in May after an 18-month ‘dumping’ investigation by the commerce ministry.
The stoking of trade tensions between the two countries, spooked many AUD investors amidst fears a trade war between the two could significantly damage Australia’s economy given China is far and away its largest trading partner.
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