GBP to AUD exchange rate jumps by 0.96% as Australian and Chinese data disappoints

The Pound to Australian Dollar (GBP/AUD) Exchange rate strengthened on Wednesday after domestic Australian and Chinese data weighed heavily upon the commodity based currency. Against the USD the ‘Aussie’ slumped beyond a two-week low and tumbled by -1.16% against the EUR.

The ‘Aussie’ began its decline after domestic consumer price inflation data came in below economist forecasts. According to the Australian Bureau of Statistics the nation’s consumer price index rose 2.9% in the year to March, below forecasts for a rise to 3.2%.

The weaker-than-forecast figure disappointed the market as it caused investors to lower their expectations for the next Reserve Bank of Australia interest rate move to be an upwards one. The data caused some economists to increase their expectations for a cut instead.

“For us it doesn’t have any implications for the RBA, we still have them taking the cash rate lower later in the year. It has been quite strong over the past two quarters and we had a little bit of an underwhelming outcome today,” said Tom Kennedy, an economist at JP Morgan.

Also weighing upon the ‘Aussie’ was the data out of China.

The preliminary reading of China’s HSBC manufacturing purchasing managers index came in at 48.3, up slightly from last month’s final reading of 48, but was still below the 50 level which divides growth from contraction. China is Australia’s biggest trading partner.

The currency is likely to soften further against the Pound if the Bank of England’s policy meeting minutes for March suggest that the Central Bank could raise interest rates sooner-than-expected as the UK economy continues to strengthen. Against the US Dollar the ‘Aussie’ is also likely to soften further if today’s US new home sales and manufacturing activity data comes in positively.

Australian Dollar (AUD) Exchange Rates

[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,,US Dollar,0.9277 ,
Australian Dollar,,Pound Sterling,0.5518 ,
Australian Dollar,,Euro,0.6714 ,
Australian Dollar,,New Zealand Dollar,1.0799 ,
US Dollar,, Australian Dollar ,1.0779 ,
Pound Sterling,, Australian Dollar ,1.8124 ,
Euro,, Australian Dollar ,1.4897 ,
New Zealand Dollar,, Australian Dollar ,0.9261 ,

[/table]