Sterling has continued to fall this week against the Australian Dollar as inflation in the UK showed a fall and more importantly a big difference between wage inflation rates.
Indeed, this weekend Bank of England member Ben Broadbent went on record to say that weak UK pay growth could persist. The BoE have halved their expectations of wage growth to 1.25% which means that there is less likelihood of an interest rate rise in the UK compared to recent expectations.
The Bank of England minutes which came out on Wednesday showed 2 of the 9 members voted for a rate rise from 0.25% to 0.75% but personally speaking I think with the recent negative movements for inflation I think that it will be now sometime before UK interest rates go up.
GBPAUD rates were higher in late July as UK GDP showed strong movements as well as a strong jobs market but the inflation data has really put paid to Sterling’s previous rally.
Sterling Aussie exchange rates have been trading between 1.77-1.78 towards the end of last week and I expect Sterling to continue to struggle owing to the comments made by Broadbent this weekend.
With China the biggest trading partner for Australia any positive or negative data will impact Sterling Australian Dollar exchange rates. On Tuesday early morning we have the release of an economic outlook index and if strong could see further Australian Dollar strength against Sterling during the early part of next week.
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