Having yesterday hit the highest level in four years the GBPAUD exchange rate has dropped since shortly after midday. This was fueled by Mark Carney’s statement that there is ‘no immediate needs to increase interest rates.’ With the recent UK unemployment rate having fallen to 7.1% this has recently put pressure on the Bank of England to possibly consider raising interest rates than first expected.
With inflation also having reached the government target of 2% this month the first time in 4 years this has also helped to strengthen the Pound as it shows how strong the UK economy has been performing as of late.
With inflation at 2% the Bank of England were not expecting unemployment to fall below 7% until earliest 2015 but with the better figures particularly during the last quarter this could happen a lot sooner.
When Mark Carney was pushed by Jeremy Paxman as to whether he would now change the threshold for unemployment his answer was that it was ‘really about overall conditions in the whole labour market.’ Therefore, it is unlikely that even if unemployment falls below the target that interest rates will change.
Yesterday Bank of England member Paul Fisher said that to change rates soon would be changed ‘only when it would be appropriate to do do.’
With the comments both yesterday and particularly today this has seen Sterling fall from its highs. It could also be argued that Sterling has been over traded recently as it has fallen today against all major currencies.
If you have a currency transfer to make and want to save money compared to using a bank then contact me directly Tom Holian [email protected]