On Wednesday the Pound to Australian Dollar (GBP/AUD) exchange rate was able to jump by 0.5% as investors ditched the ‘Aussie’ in response to disappointing domestic trade data.
Australia’s trade report showed that the nation’s trade balance widened to its largest level since the beginning of last year as the strength of the Australian Dollar and dipping commodity prices took a toll.
The deficit increased from a revised 780 million Australian Dollars in April to 1.91 billion Australian Dollars in May.
The report was a disappointment and added to the case for the Reserve Bank of Australia maintaining a policy of steady interest rates for the foreseeable future.
Earlier in the week the Australian Dollar had been buoyed by China’s manufacturing report and the RBA’s relatively flat policy meeting.
However, the South Pacific currency has now shed these gains.
The Pound to Australian Dollar exchange rate was also able to strengthen in response to the UK’s impressive construction output report.
Yesterday’s upbeat UK Manufacturing PMI led some investors to speculate that the nation’s second quarter growth could print above 1.0%. This argument received additional weight today as the UK’s Construction PMI climbed from 60 in May to 62.6 in June.
A reading of 59.8 had been expected.
The report demonstrated that output growth had stormed to a four-month high and that the level of employment in the construction sector had increased substantially.
In a statement issued by Markit economist Tim Moore it was asserted that the strong performance of the housing sector counteracted the slight dip in civil engineering output. He commented; ‘The latest survey suggests that the UK construction sector has expanded by more than 1% over the second quarter of 2014, driven by improvements in the underlying health of the UK economy, favourable funding conditions and robust increases in new housing starts.’
Movement in the GBP to AUD Exchange Rate could occur overnight as China’s non-manufacturing PMI is published.
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, 0.9456,
Australian Dollar,,Euro, 0.6923,
Australian Dollar,,Pound, 0.5517,
Australian Dollar,,New Zealand Dollar, 1.0793,
US Dollar,,Australian Dollar, 1.0575,
Euro,,Australian Dollar, 1.4440,
Pound Sterling,,Australian Dollar, 1.8151,
New Zealand Dollar,,Australian Dollar, 0.9270,
[/table]
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