Overnight consumer confidence figures have lent some support to the Australian Dollar which has resulted in levels pushing close to 1.81. The focus for me will now turn to UK data and notably unemployment figures at 09:30 and the Bank of England quarterly inflation report at 10:30. In this report Mark Carney may well give clues as to future monetary policy for the UK and it is this that will likely drive the market this morning.
UK unemployment figures are expected to show a slight decrease from 6.5% to 6.4% and should lead to some sterling strength, however I believe the quarterly inflation report is the area to focus on.
Over the past few months the pound has found support against a host of currencies due to interest rate speculation and with some of the UK data being softer than forecast lately I believe Carney may calm any interest rate speculation and keep his cards pretty close to his chest. As a result I would expect the pound to see a slight decline, although the losses are likely to be limited as I believe the market is now slightly less hawkish in relation to interest rates. I would look for the GBP/AUD pairing to continue to trade within the 1.80-82 range for the foreseeable future.
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