Not even Merv saying No to more interest rate cuts can help sustain a sterling rally against the Australian dollar

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Category: Australian Dollar News

Written by Will Peters

International Money Transfers at our sister site

The Australian economy is just too strong to allow GBP-AUD recover the 1.5 level.

Yesterday saw Bank of England Governor Mervyn King sprout a sterling rally when he hinted that any further interest rate cuts at the BoE are unlikely.

But, strong jobs data highlights the health of the Australian economy ensured the AUD rebounded against sterling overnight.

The pound to Australian dollar exchange rate is 0.06 pct in the red at 1.4801.


The pound to New Zealand dollar exchange rate is 0.29 pct higher at 1.9256.

"Sterling’s gains against the AUD were almost entirely erased last night thanks to an excellent aussie jobs data released. Fourteen thousand jobs were added to the aussie economy, while the unemployment rate unexpectedly dipped to 5.2%. RBA Governor Stevens appears to be correct when he says the interest rate cuts in the past year are feeding through. Further cuts in the second half of the year are looking less and less likely," notes Richard Driver at Caxton FX.

GBP-AUD is trading at 1.48 and tonight’s quarterly monetary policy statement from the RBA looks likely to provide the AUD with even more support warns Driver.

Elsewhere, sterling gained even more upside against the kiwi dollar thanks poor quarterly employment data from New Zealand.

GBP-NZD is trading up towards 1.93 and Driver says sentiment is unlikely to improve towards the New Zealand currency today:

"Kiwi employment data contrasted with Australia’s impressive figures last night. Over the course of the second quarter, the kiwi labour market actually shrank by 0.1%, well below the expectations of 0.3% growth. To make matters worse, the kiwi unemployment rate climbed unexpectedly to 6.8%, which is the highest level seen since the end of 2010. Clearly this improves the case for RBNZ rate cuts and weakened the NZD accordingly."