GBP/AUD have spiked up once again during Wednesday’s trading, with rates moving over 2 cents. This increased volatility is at least in part due to the latest UK unemployment figures which were released this morning. Figures came in better than expected at 5.7% and boosted Sterling’s value across the board.
The AUD has struggled for some time and with the Reserve Bank of Australia (RBA) unequivocally committed to devaluing the AUD in order to boost trade, it is not a surprise to see GBP/AUD trading close to a 6 year high. RBA governor Glenn Stevens recently spoke about how the stagnation of the Australian economy was of major concern and that the central bank’s ability to kick start the economy by lowering interest rates had ‘diminished considerably’, eluding to the fact that the RBA could not just continue to cut their base interest rate to counter on-going economic concerns.
Whilst the Bank of England (BoE) will not be keen to see Sterling’s value rise unopposed, they may have little options available to counter this and a move back above 2, at least in the short-term, is certainly a possibility.
Looking ahead and Friday’s UK Retail Sales figures are likely to dominate headlines for the rest of the trading week and could cause additional volatility on GBP/AUD exchange rates as we head into the weekend.
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