Sterling has once again made a major move against the AUD, with rates moving ever closer to 1.90 on the exchange. Sterling’s run may well continue in the short-term, as the RBA have already said they are not concerned about the AUD losing value. They felt it was becoming too strong, which in turn was negatively affecting their export industry. There is also a concern amongst investors that growth forecasts for the Australian economy have shrunk and the demand in China for Australia’s raw materials may start to wane, as their economic growth has also slowed.
The AUD had started to claw back some ground against GBP, following better than expected CPI data on Tuesday night. This spike was quickly erased following the release of yesterday’s UK unemployment figures and Bank of England (BoE) minutes. UK unemployment dropped to 7.1%, creeping ever closer to the BoE’s target of 7%. Once it falls below this figure talk of an interest rate hike will start to dominate the headlines further.
Personally I feel we will see GBP/AUD rates break through 1.90 but do not expect this spike to continue indefinitely. The BoE are also becoming concerned about the Pound gaining too much value and because of this may well step in if the current trend continues.
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