GBP/AUD exchange rates have remained volatile throughout the trading week, with a host of key economic data releases providing opportunities for both buyers and sellers. The AUD has moved away from the 7 year low’s we saw only a few weeks ago and whilst I don’t expect the improvement to continue at the same rate, I do feel the AUD is likely to find support around 2.15.
The Pound has slipped from those highs due to a number of factors but primarily due to an improvement in growth forecasts for the Australian economy and the decision by the Reserve Bank of Australia (RBA) not to cut interest rates further during their last policy meeting. This was taken a sign of improved strength by the markets, which has allowed the AUD to gain some sustained market support.
However, despite this improvement the economic situation in Australia remains fragile and I do expect the AUD to put pressure on the 2 level against Sterling under current conditions. We will need to see a major improvement in the Chinese economy in order to facilitate a move like this and/or a crash in UK data and growth forecast, a scenario which seems unlikely when looking at each economy.
We’ve seen a small improvement for the AUD this morning following employment data released overnight in Australia. The official unemployment rate came in better than expected at 6.25 and helped to drive GBP/AUD rates back towards 2.10 at this morning’s high.
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