The Pound (GBP) to Australian Dollar (AUD) exchange rate weakened on Tuesday after fairly positive economic data out of China increased demand for the ‘Aussie’ and as data showed that the UK’s public finances worsened again in September, casting into doubt the true strength of the nation’s recovery.
Against the US Dollar, the Australian Dollar advanced to its highest level in six days as data out of the Oceanic nation’s largest trading partner came in stronger than forecast.
Chinese industrial production increased at an annualised rate of 7.3% in the three months to September, a figure, which was higher than the 7.2% expected by economists. The data eased some concerns over the health of the global economy.
A separate GDP report out of China was met with a mixed reaction with some traders seeing it as a positive and others as a negative.
According to the data, the Chinese economy expanded at an annual rate of 7.3% in the three months to September, and a number, which beat the forecasted figure of 7.2%. Despite coming in better than forecast, the report showed that, the nation’s economy slowed from the 7.5% growth rate recorded in the previous quarter.
‘It’s no boom, but no bust either. They are not going to do a big stimulus. Today’s numbers don’t really suggest they have to do a big stimulus. The Chinese economy is on track for growth of around 7.5% this year,’ said Shane Oliver, chief economist at AMP.
The Chinese figures were enough to cause traders to shrug off the release of the Reserve Bank of Australia (RBA) policy meeting minutes. The minutes showed that policy makers still think that the ‘Aussie’ is overvalued.
Worsening UK Finances weaken Pound
The Pound was weighed upon by a report, which showed that the British government increased its level of borrowing over the past six months; the amount was 10% more than the same period as the previous year. With unemployment, falling questions are being asked if the jobs being created are actually contributing to the nation’s income.
With so many low hours or zero hours based jobs created, the government tax income has faltered, which in turn has forced it to raise its level of borrowing. Weak wage growth is also playing its part as it offers the treasury no extra tax income. Over the past year income tax income has risen by just 0.1%.
Sterling weakened, as it now looks increasingly likely that chancellor George Osborne will achieve his target of cutting the deficit this year.
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast
The GBP/AUD exchange rate is likely to experience volatility on Wednesday due to the release of the latest Australian Inflation data and Bank of England policy meeting minutes.
UPDATE
The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.8318.
With Australian domestic data producing mixed results on Wednesday the ‘Aussie’ is fluctuating against its peers. The most significant data release was the Consumer Price Index which met with the median market forecast of 2.3% down from 3.0%. Given that the Reserve Bank of Australia’s inflation target is between 2-3% this result will be considered positive.
Sterling, meanwhile, is relatively unchanged against the majority of its most traded currency competitors as traders await the publication of the Bank of England minutes from their most recent policy meeting.
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,0.8802 ,
Australian Dollar,,Pound Sterling,0.5451 ,
Australian Dollar,,Euro,0.6867 ,
Australian Dollar,,New Zealand Dollar,1.1010 ,
US Dollar,, Australian Dollar ,1.1360 ,
Pound Sterling,, Australian Dollar ,1.8367 ,
Euro,, Australian Dollar ,1.4557 ,
New Zealand Dollar,, Australian Dollar ,0.9079 ,
[/table]
