Australian Dollar Holds Steady after Unemployment Data (James Lovick)

AUDGBP Lower as Sterling Gets a Growth Boost

The Australian dollar is still seeing an uncertain period with so many factors globally influencing the exchange rate. Overnight has seen unemployment data released which has held firm at 5.5% as expected. The Reserve bank of Australia are paying close attention to the labour market at the moment and are keeping a very close eye on the amount of wage growth down under, something all the central banks are monitoring closely. When wage growth begins to rise it will be a reason for the RBA to raise interest rates although for the moment the figures are still sufficiently weak to make the case for no changes to interest rates.

The RBA minutes from the last meeting will be released next week and will reveal what the central banks thinking from the last meeting. Any suggestion that the RBA will look to raise rates this year and follow in the US Fed’s footsteps could see the Aussie gain although it is my understanding that they are more likely to monitor the situation in light of all the recent volatility in the financial markets. Those clients looking to sell Australian dollars hoping for a move back to 1.70 might have a good while longer to wait.

Clients looking to buy Australian dollars are seeing a good opportunity to buy although the recent rally in the price of sterling has slowed down in the last week with rates coming off the recent highs. The pound is likely to see a lot of volatility in the coming weeks coming from the political arena. There are a series of speeches to be made by British politicians within the British government which should offer more clues as to where Brexit will end up.

UK Prime Minister Theresa May will be in Germany tomorrow and she is likely to make a statement either on Friday or Saturday. If we go back to the Lancaster House speech back in 2017 the pound rallied by almost 2% following the speech and so it should not be underestimated how much the sterling markets could move if more detail over Brexit is offered.

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