The recent positive trend for Sterling against the AUD is showing no signs of relenting, despite the pair hitting a fresh 5 and a half year high during this morning’s trading. The reason for this spike is, at least in part, due to the Australian unemployment figures released overnight. These showed that unemployment is standing at 6.4%, higher than the 6.2% prediction and this will cause further concerns over the Australian economy, which is already reeling following the slowdown in China’s economic growth and ultimately their demand for Australia’s vast supplies of raw materials.
The Reserve Bank of Australia (RBA) have stayed steadfast in their commitment to lower the AUD’s value, so will not be concerned by the current trend but the economic stagnation down-under is likely to raise alarm bells, as the Australian economy is so heavily reliant on its export trade, that any sustained slowdown in this area will be of grave concern.
Many investors will now be waiting for the 2 barrier to be breached and although this now looks likely, whether or not rates will hold above this in the medium to long-term is certainly debatable.
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