UK data due out this week could determine whether the BoE will hike rates in August

Australian Dollar Jobs Data: Strong Performance to Match That of the Pound Sterling

Sterling strengthened on Friday against the Australian Dollar as well as a number of other major currency pairs, reversing some of the losses from earlier in the week.

The reason for the strong performance from the Pound can be put down to the upward revision of UK GDP in the first quarter of this year. Economic output was previously considered to be 0.1% although this figure has been upgraded hence the strengthening Pound. The improvement in the figures is likely to result in an improved chance of a rate hike in August, which is why the Pound climbed.

Throughout the week a number of key indicators will be released that could offer markets an idea of the health of the UK economy.

The PMI (Purchasing Managers Index) reports for the Construction, Manufacturing and the Services sectors will all be covered and it will be interesting to see how the releases impact the currency markets. If the figures beat expectations I would expect to see a boost to the Pound’s value as the likelihood is that positive figures will improve the chances of an interest rate hike from the Bank of England in August.

GBP/AUD had previously traded above the key 1.80 mark when a rate hike was expected back in May, although the pair dropped off once the hopes didn’t materialise. The pair are now lodged just below 1.80 and I would’t be surprised to see the pair trade higher if this week’s data doesn’t disappoint. The releases are all due out at 9.30am UK time so if you would like to plan around these events or be kept updated in the wake of them, do feel free to register your interest with me.

The Construction figure is expected to strengthen whereas the rest are expected to remain the same.

On Thursday the governor of the Bank of England will be speaking at an unspecified time in Newcastle and by then the PMI releases will be public so he may be questions regarding future rate hikes. There could be movement for GBP exchange rates during his speech so it’s worth tuning into the markets around this time.

For more information on the potential impact of Mark Carney’s speech this week, please feel free to get in touch here.