British Pound to Australian Dollar Exchange -

Pound Climbs as UK Unemployment Falls

Peter Lavelle - 19.04.2012

Welcome to my latest update of the British pound to Australian dollar exchange rate, covering the 13th to 19th April 2012.

Is the UK economy firming up? This is the question economists are debating this week, following surprise data that revealed UK unemployment declined -0.1% to 8.3% last month.

More than 35 thousand people found a job last month - the first decrease in unemployment in eleven months - prompting debate about whether the UK might be on the front foot at last.

On first impressions at least, it lends credence to George Osborne hope that the private sector can compensate for public sector job losses as he cuts spending.

UK Pound Climbs

The pound meanwhile climbed across the board on this data, picking up one and a half percent against the Australian dollar to bring it to its highest rate since last December.

So far these gains have held, which suggests that if the UK continues in this direction the pound might make further gains. Of course this is something to look out for in coming weeks.

British Pound to Australian Dollar Exchange - Looking Ahead

pound to australian dollar exchange

Looking ahead, the pound does face some strong headwinds though which might limit its strength.

For one, the Eurozone debt crisis has been re-ignited, as the markets ring their hands over whether Spain can meet its ambitious deficit reduction targets. Given Britain's proximity here, the crisis could damage the pound if Spain goes pear-shaped.

Furthermore, there are signs that the Chinese economy is gaining again, following a weak start to 2012.

The Beijing government is expected to extend the flow of credit to businesses across the Chinese economy, to stimulate growth and wean China from its dependence on exports.

This is set to begin in earnest in the next three months, which could see Chinese demand for Australian commodities climb once again. That would support Australian dollar strength.

In short, the outlook for the pound to Australian dollar rate is mixed: there are headwinds either way.

Yours kindly,

Peter Lavelle,

Foreign Exchange Specialist Pure FX

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