The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate fell by over a percent after the Bank of England (BoE) released its latest inflation report and Australian Unemployment rose from 6.1% to 6.4%.
Joblessness increased by more-than-forecast in the Australian economy and saw speculation for further Reserve Bank of Australia (RBA) rate cuts heighten.
Economist Craig James weighed in, saying: ‘On the basis of the continued softness of the job market, there seems no barrier to the Reserve Bank cutting interest rates again at the March board meeting. Simply, Australia is growing at a far slower rate than its potential.’
RBA Governor Glenn Stevens had suggested growth could remain a little below average.
Stevens stated: ‘Overall, the bank’s assessment is that output growth will probably remain a little below trend for somewhat longer, and the rate of unemployment peak a little higher, than earlier expected.’
Meanwhile, Pound strength came from BoE Governor Mark Carney hinting that interest rates would rise sooner than expected if low inflationary levels persist. However, Carney didn’t rule out a cut in interest rates if needed.
Governor Carney stated: ‘The important point… is to underscore that is we were in a situation, which we are not in at the moment, but if we ever were in a situation where we needed to provide additional stimulus, we have many options.’
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate could fluctuate on Friday with the release of UK Construction Output figures.
Friday will also see RBA Governor Stevens speak, which could impact Australian Dollar trading.
In the week ahead, the UK Consumer Price Index (CPI) will be released on Tuesday which could have a major impact on the Pound Sterling to Canadian Dollar (GBP/CAD) exchange rate.
Meanwhile, UK Unemployment Rate and Employment Change figures will surface on Wednesday and could be another major mover for the Pound Sterling.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate resides at 0.5001. The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trending in the region of 2.0002.
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