Above Forecast Trade Balance Figure Fails to Boost ‘Aussie’ as Retail Sales Significantly Decline
While both the Australian Trade Balance and Services PMI produced good results overnight the severe contraction in July’s Retail Sales figure has weighed on the buoyancy of the ‘Aussie’ (AUD). General Pound (GBP) dovishness in anticipation of the UK Services PMI this morning, however, is seeing the GBP/AUD exchange rate trend narrowly at 2.1738.
Earlier…
Unimpressive UK PMI results remained a dovish influence on Sterling (GBP) today as the GBP/AUD exchange rate dipped in spite of poor Australian GDP.
Hawkish BoE Sentiment Outweighed by Contraction in UK Manufacturing Sector, GBP/AUD Held Strong
Comments at the weekend from Bank of England (BoE) Governor Mark Carney regarding the influence of China and the global economic slowdown on the BoE’s monetary policy were not of particular impact on the Pound (GBP) in the absence of supportive data. Any increased boost this might have offered to the currency this week was ultimately lost as Tuesday saw the UK Manufacturing PMI contract to 51.5, instead of achieving the slight rise that had been forecast. Sterling was softened as a result of this disappointment undermining of Carney’s optimism, although not all rivals were in a strong enough position to capitalise.
The Reserve Bank of Australia (RBA), meanwhile, chose to maintain the current 2% level of interest in spite of recent pressures on the antipodean currency. Although Black Monday and the ensuing plunge in commodity prices remains on the minds of traders, the fact that the RBA held off on engaging in any easing measures for another month offered a decent level of reassurance. However, as further shortfalls on Chinese economic data also emerged the GBP/AUD exchange rate returned to a bullish uptrend, reaching a daily peak of 2.1848.
Pound (GBP) Sank on Weak UK Construction Data Today as ‘Aussie’ (AUD) Struggled with Disappointing GDP
This morning proved significantly bearish for the ‘Aussie’ (AUD) as the Australian second quarter GDP came in lower than had been forecast with the year-on-year figure clocking at a sharper decline of 2% rather than 2.2%. While this might not be entirely unexpected, given the manner in which the economy of China, its primary export partner is presently languishing, the number still came as a disappointment and prompted another downturn in ‘Aussie’ demand.
Doubts also continued to build over the state of the UK economy today as the second of the domestic PMIs produced another poor showing. Growth in the construction sector did expand on the previous month, going from 57.1 to 57.3, but nevertheless failed to live up to predictions of more robust economic activity. Preventing the GBP/AUD exchange from making more significant gains, this set the pairing on a general downtrend.
GBP/AUD Exchange Rate Forecast: Potential Return to Form with Upcoming UK Services PMI
With the Chinese stock markets now closed until next week, the ‘Aussie’ may be able to recover some ground over the coming days, particularly if commodity prices can stage a decent rally in the absence of further negative stimulus. Tomorrow’s Services PMI, Trade Balance and Retail Sales figures may offer some respite for the struggling commodity currency, although further weak performances stand likely to drive up the GBP/AUD pairing.
While the UK Composite PMI seems sure to print in the red tomorrow, the more influential release will be the Services PMI. As a majority of the nation’s GDP is derived from this sector, a positive or above forecast result could well be enough to overshadow the subpar showings of the previous indices.
Current GBP, AUD Exchange Rates
At time of writing the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trending lower around 2.1798, with the Australian Dollar to Pound Sterling (AUD/GBP) pairing moving narrowly at 0.4585.
Comments are closed.