GBP/AUD forecast: Better than expected UK data fails to strengthen rate

GBP AUD Consolidates with UK Employment Due

Economic data released out of the UK last week beat expectations in many cases, demonstrating that the UK economy is remaining resilient despite the uncertainties weighing on the UK economy moving movement. How is this affecting the Pound to Australian Dollar exchange rate?

Last week data released showed that the UK unemployment rate has dropped recently, and also that inflation isn’t stagnant as the inflation figure came out better than expected. Retail Sales also beat expectations and this bout of impressive data can be added to the interest rate hike that took place early this month. It’s worth noting that the UK interest rate is now at its highest level in a decade.

Despite the positive data the Pound has failed to gain any value and against some currencies Sterling has even dropped in value.

The Pound to Aussie Dollar level has spent most of the year north of 1.75 although at the time of writing it’s just below this mark at 1.7450 at the mid-market level. This is 10-cents below its highest level of the year and much of the drop in the Pound’s value is being attributed to Brexit uncertainties, especially now that UK data has shown some positive signs.

Economic data is thin this week, meaning that politics is likely to remain the main driver of currency value despite many politicians being on their summer recess period until the 4th of September. Dominic Raab, the new Brexit Secretary who took over from David Davis who stepped down after the release of Theresa May’s chequers plan, will be in Brussels this week to continue Brexit talks. Ever since Dr Liam Fox, the International Trade Secretary stated that there’s a 60% chance of a ‘No Deal Brexit’ the Pound has struggled to gain value as the realities of the UK’s situation has surfaced.

The Aussie Dollar has also benefited from the calming of trade wars erupted between the US and China. With Australia’s economy being linked heavily to both global trade and China specifically it’s not unusual to see the Aussie Dollar benefit from these kind of talks quietening down.

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