Australian unemployment data disappoints the markets
The pound to Australian dollar exchange rate has made strong gains after Australian unemployment data released this morning disappointed the markets. The interbank rates for GBP vs AUD have rallied higher to 1.8375, at the time of writing. The unemployment level down under rose in August to 5.3% from 5.2% the previous month. The last Reserve Bank of Australia minutes hinted at a weaker jobs markets and the concern now in that the numbers may disappoint further going forward. The unemployment data coincide with recent weak Gross Domestic Product data for the second quarter which was recorded as the lowest in the last decade.
Bank of England expected to leave rates on hold
UK retail sales data is released this morning ahead of the Bank of England interest rate decision at 12pm. The Bank of England is not expected to make any changes to the headline interest rate today with Brexit so close by as well as the growing prospect of a general election. Rates are expected to stay on hold at 0.75% with so many external distractions. This is despite UK inflation data released yesterday which fell to its lowest level since 2016 and below the Bank of England target rate. It has also been reported that in the event of a no deal Brexit then interest rates may be cut further in the coming months.
How will the Supreme court ruling affect the GBP to AUD exchange rate?
Brexit meanwhile continues to dictate the travel for sterling exchange rates and today will see the third and final day at the Supreme Court. The courts are hearing whether it was unlawful for Boris Johnson to prorogue parliament. An outcome may come as soon as today although the top judges may want the time over the weekend to come to a unanimous decision. Expect volatility based on the outcome especially if the courts did rule against the government. Expect high volatility for the GBP AUD pair and those clients looking to buy or sell Australian dollars would be wise to plan around all the latest developments.
The EU have also given the UK until the end of September to produce written proposals which could see a shift on where Brexit is heading. To date the Prime Minister has reportedly progressed discussions on the controversial backstop by providing alternatives where checks could be done away from the border. However the EU are keen to see these proposals in writing, something the British side is reluctant to do at this stage.
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