AUD Strengthens Following Positive Unemployment Figures (Matthew Vassallo)

AUDGBP: Australian Dollar Weakens in Worst COVID-19 Day Yet

It’s been another volatile week for GBP/AUD exchange rates, with the pair shifting almost 4 cents from high to low. The Pound had started to creep back towards 2.10 on the exchange earlier this week but the AUD has found further support and by close of European trading today the pair were sitting close to 2.08.

The reason for today’s move came overnight following the release of the latest Australian employment figures. The official unemployment figure was expected to show a drop to 6% but the actual figure of 5.8% came out better than expected and helped boost market confidence in the AUD. This coupled with the Reserve Bank of Australia’s (RBA) decision not to cut interest rates has been seen as a sign of strength and I certainly feel the AUD will now find support around 2.10 under current market conditions.

It was a big day for Sterling following the Bank of England’s (BoE) latest interest rate decision and subsequent monetary policy statement. Whilst it was widely anticipated that rates would be kept on hold at 0.5%, it was the BoE minutes which were likely to cause any additional movement on the exchange but with the vote remaining 8-1 against a rate hike the markets seemed to take the news in their stride.

Personally I would be tempted by the current buy prices on GBP/AUD, as we do not foresee a major spike for Sterling. The UK recovery is on track and the markets have now factored this into the current rates, so any negative data is likely is likely to hit the Pound hard.

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