- UK currency jumps across the board – Investors take heart as new PM is sworn in
- New Chancellor Hammond boosts Sterling – Osborne’s budget plans are scrapped
- Australian Dollar similarly strong after employment stats – Unemployment rises as do new jobseekers
- BoE interest rate decision looms – Rate cut could shatter the Pound’s appeal
The value of the Pound has been extremely high against peers today, with gains stemming from supportive news from Prime Minister Theresa May’s new cabinet.
The Australian Dollar has also been moving under favourable conditions recently, with recent unemployment rate stats doing little to halt this upwards momentum.
UK Economic News: Pound Appreciates as New Chancellor Ditches Emergency Budget
The Pound has unusually managed to appreciate of late, despite extremely turbulent circumstances in the UK at present.
While the nation has brought on a new Prime Minister in the form of Theresa May, the Pound continued to depreciate yesterday into the night.
It was only after new Chancellor Phillip Hammond declared, that against predecessor George Osborne’s intentions, an emergency budget of austerity measures and tax hikes would not be forthcoming.
Speaking shortly after he was appointed, Hammond stated that:
‘There’s a lot of work now to do. The Prime Minister made clear we will do an autumn statement in the usual way in the autumn and we’ll look carefully over the summer at the situation’.
The Pound has risen by 0.3% against the Australian Dollar (GBP AUD), 1.5% against the New Zealand Dollar (GBP NZD) and by 2.3% against the Japanese Yen (GBP JPY).
Australian Dollar Rallies Overall despite Climb in Unemployment Rate
The ‘Aussie’ has risen notably against most rivals today, having made gains of 0.5% against the US Dollar (AUD USD) and 1.2% against the New Zealand Dollar (AUD NZD). Against the Pound, a slight dip of -0.3% has been recorded.
The latest domestic data out of Australia has consisted of the employment change and unemployment rate for June; a change from 19.2k to 7.9k has been seen, while the actual unemployment rate has also risen from 5.7% to 5.8%.
Although rising unemployment would usually dampen investor enthusiasm, the fact that this may be due to a rising participation rate has negated any negative impact.
An additional source of support has been the rising July consumer inflation expectation.
Future GBP, AUD Forecast: Bank of England (BoE) Interest Rate Decision Incoming
Today may be a historic one for the Bank of England (BoE), as for the first time in around seven years, the BoE may cut the UK’s interest rate below the current 0.50% at 12 o’ clock.
Such an outcome would be in response to major market pressures imposed on the UK economy by the ‘Brexit’ decision, and would likely devalue the Pound heavily despite being designed to increase long-term economic growth.
From Australia, the next domestic data isn’t due until Monday, when the May CB leading indicator is released.
Current GBP, AUD Exchange Rates
The Pound Australian Dollar (GBP AUD) exchange rate was trending in the region of 1.7311 and the Australian Dollar Pound (AUD GBP) exchange rate was trending in the region of 0.5779 today.
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