Sterling is creeping up this morning in anticipation of the UK unemployment figures due out in less than an hour.
The expectations are for a fall to 6.4% the best in many years which if comes out the same or better we could see Sterling rally across the board and strengthen against the Australian Dollar.
Chinese Retail Sales fell overnight from 12.4% to 12.2% which has weakened the AUD against the Pound. China is Australia’a leading trade partner and is a huge importer of Australian resources. Generally speaking if results are poor in China this has a detrimental effect on the Australian Dollar.
An hour after the UK unemployment data and arguably more important is the release of the Quarterly Inflation Report. Inflation in the UK has hit 1.9% recently which is close to the Bank of England’s target of 2% and this is turn could put further pressure on the BoE to raise interest rates sooner than the markets currently expect which is likely to lead to Sterling strength.
US Retail Sales are announced later this afternoon and this is often one of the biggest market movers of the month. If the results are strong this could increase the appetite for more risk so could potentially see the AUD fightback against the Pound later this afternoon.
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