The Australian Dollar continues to strengthen against the British Pound and a number of other currencies following the release of better-than-expected employment data for July.
Traders increased the value of the ‘Aussie’ as speculation that the Reserve Bank of Australia (RBA) would make further interest rate cuts waned. The countries unemployment figure fell to a lower-than-expected seasonally adjusted 5.2% in July from an upwardly revised 5.3% in June, while the number of people employed rose 14,000, the Australian Bureau of Statistics said.
“The jobs data is further evidence that the economy is tracking at close to its trend pace and will make the RBA even more comfortable with its current policy setting," said Paul Bloxham, Chief economist at HSBC Australia.
The ‘Aussie’ has also seen gains thanks to the expectation that economic data out of China, Australia’s biggest trade partner, will be better than expected fuelling demand for riskier currencies.
In Britain the Bank of England’s latest inflation report painted a gloomy picture for the UK economy’s growth prospects, with the Bank slashing its growth forecast from 0.8% to near 0%. The rises seen in the Pound’s fortunes are predicted to be short-term with some analysts sighting the rise as a knee jerk reaction. Sterling, seen for much of this year as a safe haven from the Euro zone debt crisis, has been falling against the Aussie in recent weeks, as the UK economic outlook has deteriorated.
This morning in London at 10.30am the Australian Dollar was trading in the region of 0.676 against the Pound.