Since early February when the RBA announced an end to their current interest rate cutting cycle we have seen Sterling vs Australian Dollar exchange rates drop by as much as 7% during this period. Also, during this time the RBA governor Glenn Stevens has suggested that the mining sector will be replaced by the construction sector as the next boom for the Australian economy likely to last for 2 years.
Australian unemployment data during April showed that the figures fell from 6% to 5.8%, the best employment levels for any western economy and showing signs of growth for the Australian economy and a reason to invest in the country. This is also another reason why the Australian Dollar has strengthened against Sterling.
However, during last week with inflation in the UK falling below wage inflation for the first time since 2009 the Pound has seen a rise across the board against all major currencies including the Australian Dollar which has seen exchange rates break through 1.80 for the first time in weeks.
Chinese Premier Mr Li said growth at about 7.5 per cent would be with a reasonable range. On Wednesday, China reported that its economy had expanded by 7.4 per cent year-on-year, above consensus forecasts of 7.3 per cent. With growth forecasts having fallen recently in China this is another reason why the Australian Dollar lost ground against the Pound last week.
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