Stronger Chinese Data Bolsters Australian Dollar (AUD) Exchange Rate Today
Better-than-expected Chinese Services and Composite PMIs have helped to shore up the Australian Dollar (AUD) on Wednesday morning, as the world’s second largest economy shows signs of improvement. As a result the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has been trending lower in the region of 1.8716.
Earlier…
The Pound (GBP) continued to benefit from Australian Dollar (AUD) weakness on Tuesday, with the antipodean currency softened by disappointing domestic data.
Pound Sterling (GBP) Climbed after UK Construction PMI Bettered Forecast
Worries over the outlook of the UK economy were somewhat eased on Monday as the latest domestic Construction PMI was found not to have declined as anticipated. Holding steady at 54.2, sector growth remained relatively robust to suggest that ‘Brexit’ downside risks had not dented the economy as much as previously predicted. While this did nevertheless indicate that the construction industry remained at its weakest level of growth in three years the Pound (GBP) was buoyed across the board.
Meanwhile, commodity-correlated currency demand took something of a hit at the start of the week, as markets continue to speculate over the likelihood of an imminent interest rate hike from the Fed. The latest Australian Retail Sales figures also proved unexpectedly disappointing yesterday, defying predictions of a modest uptick to 0.4% to instead show no growth. This undermined the impression of a stronger domestic economy, pushing the ‘Aussie’ (AUD) lower as confidence weakened.
RBA Holds Fire on Interest Rates, GBP/AUD Exchange Rate Extends Gains
Demand for the Australian Dollar has continued to slide in the wake of the Reserve Bank of Australia’s (RBA) decision to leave interest rates on hold for another session. While Governor Glenn Stevens did not resort to any particular jawboning, and the central bank continued to show reluctance towards cutting rates, this still failed to support the antipodean currency. As the Australian Services PMI was also found to have dipped back into contraction territory in March investors have continued to sell out of the ‘Aussie’ today.
Optimism towards the Pound faltered somewhat on Tuesday morning, in spite of the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate remaining on an uptrend. Although the latest UK Services PMI showed a distinct improvement, rising from 52.7 to 53.7, this was not enough to discourage concerns over the economy’s growth prospects. Momentum was seen to have slowed since the end of 2015, despite remaining in expansion territory, as the looming June EU membership referendum deters investment.
GBP/AUD Exchange Rate Forecast: Weak Australian Construction PMI to Maintain ‘Aussie’ Dovishness
Should Thursday’s Australian Construction PMI show a move deeper into contraction the ‘Aussie’ could remain on a downtrend, raising further concerns over the health of the domestic economy. Continued economic weakness is unlikely to encourage much Australian Dollar positivity, particularly if commodity prices slip lower.
Later in the week the Pound could return to bearishness, however, as February’s Industrial and Manufacturing Production figures are anticipated to show fresh declines. Continuing developments in the sale of Tata Steel’s UK assets, and consequently the fate of the UK steel industry, are also likely to drive Sterling sentiment over the coming days.
Current GBP, AUD Exchange Rates
At the time of writing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was making gains around 1.8864, while the Australian Dollar to Pound Sterling (AUD/GBP) pairing was slumped in the region of 0.5300.
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