With exchange rates for GBPAUD having traded near 1.82 levels during the early part of last week they fell towards 1.80 after the release of unemployment data which confirmed levels of 5.8% showing signs of a strong economy down under.In yesterday’s Quarterly Statement the Reserve Bank of Australia revised its growth forecast for June 2014 to 3% from 2.75% which saw further Australian Dollar strength against the Pound.
It is clear that unemployment figures are strong but the RBA remains cautious about what the future may hold so although we have seen a drop towards the 1.80 levels I think during next week we could see the GBPAUD head in an upwards direction again.
In a statement on Friday the NIESR confirmed that UK GDP was back to near pre-recession levels which is why I think the GBPAUD rate will go up in the short term. With UK unemployment the best it has been since 2009 and wage inflation having overtaken real inflation consumer confidence is likely to rise leading to more consumer spending and therefore more growth. GDP in the UK is largely affected by retail sales so if they are on the rise it is likely to be reflected in the vale of the Pound.
The NIESR upgraded growth forecast of the UK from 2.5% to 2.9% and if growth continues it becomes more attractive for global investors to hold Sterling therefore leading to Sterling strength.
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