Slump in Chinese Imports Provokes Dovishness for ‘Aussie’ (AUD) Today, GBP/AUD Exchange Rate on Uptrend
A weak Chinese Imports figure for September, which contracted by an unexpected -20.4%, put an end to the recent strength of the ‘Aussie’ (AUD) early on Tuesday. As a result the GBP/AUD exchange rate was on a positive trend in the region of 2.1019 ahead of the latest UK inflation data.
Earlier…
With metals remaining up in trading today and positive sentiment on the Chinese stock markets the ‘Aussie’ (AUD) has continued to make gains, pushing the GBP/AUD exchange rate into a fresh slump.
Limited Narrowing of UK Trade Deficit Held down Pound (GBP), ‘Aussie’ (AUD) Gained on Commodity Rally
Although Australian data during the last week was not especially supportive, continuing to point towards economic slowing, the ‘Aussie’ (AUD) went on a strong bullish run. Commodities saw a significant rally as the odds of a 2015 Fed interest rate increase were diminished and an atmosphere of risk appetite dominated trading. Commodity trader Glencore helped to stoke the resurgence with the announcement that it would be cutting its annual zinc production, amounting to 4% of the global supply. This reduction led to an upsurge in value for a number of other base metals, including lead, nickel and aluminium, which in turn drove up the appeal of the antipodean currency.
The Pound (GBP), meanwhile, was weighed down by the publication of the UK’s Visible Trade Balance and Construction Output figures. Showing a wider trade deficit than expected, this data prompted a sharp downturn for Sterling. Comments from Chancellor of the Exchequer George Osborne on Friday afternoon offered little encouragement for investors, as he iterated that the domestic economy is not as insulated from negative global headwinds as might be hoped.
‘Aussie’ (AUD) Remains Dominant Today as Buoyed Chinese Stock Markets Keep Commodities on Bullish Form
Early this morning the Australian Credit Card Purchases figure was shown to have experienced a modest decrease with Credit Card Balances in August slightly expanding. The impact of this, however, has been relatively limited as commodity prices remain on a general uptrend, buoyed further by an improvement on the Shanghai Composite which closed at its highest level for seven weeks today. Speculation of further stimulus measures for the Chinese markets has been driving this resurgence, as metals continue to experience increased demand amid pundit optimism.
GBP/AUD Exchange Rate Forecast: Upcoming UK Inflation Data Could Prompt Turnaround for Pairing
A strong rally could be in store for the Pound, however, with the September Consumer Price Index data for the UK due for release tomorrow. While no change is anticipated in the baseline CPI the core figure is forecast to post a slight uptick from 1.0% to 1.1%. Given the importance of this major inflationary measure, improvement here is likely to see a return to bullish form for Sterling, supporting chances of a nearer-term interest rate increase from the Bank of England (BoE).
Should commodities continue to post strong gains, however, the ‘Aussie’ may well hold its strength against rivals. Tuesday’s NAB Business Confidence report for September could also keep sentiment towards the antipodean currency hawkish if it demonstrates an improvement in domestic optimism.
Current GBP, AUD Exchange Rates
At time of writing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was on a downtrend in the region of 2.0847, while the Australian Dollar to Pound Sterling (AUD/GBP) pairing was rising in the range of 0.4794.
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