The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trending within a limited range during the European session.
Wednesday’s British economic data produced mixed results, causing the Pound to hold steady versus many of its most traded currency rivals. However, with increasing speculation that the Bank of England (BoE) will be one of the first major central banks to hike rates, the Pound is likely to avoid any significant declination.
During the Australasian session the ‘Aussie’ (AUD) declined significantly after domestic data printed disappointingly. In addition, poor results from China’s economic data weighed on the South Pacific asset.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 0.5065.
Pound Sterling (GBP) Exchange Rate Stutters as Factory Output Slows
On the year, January’s UK Industrial Production rose in line with the median market forecast of 1.3%, bettering the previous growth of 0.5%. However, year-on-year Manufacturing Production only came in at 1.9% in January and failed to meet with the market consensus of output of 2.6%.
‘The weakness (in manufacturing output) reflected a 9.5% drop in electronics — the biggest in 13 years — after a surge in December because of a large defence industry contract,’ stated Jennifer Ryan writing for Bloomberg.
The data is unlikely to have a significantly detrimental impact on Sterling, however, thanks to comments from BoE Governor Mark Carney. He said that using stimulus to combat low oil prices would be ‘extremely foolish’.
‘The thing that would be extremely foolish would be to try to lean against this oil price fall today,’ Carney told a panel of lawmakers in Britain’s parliament. ‘(That’s) because the impact of that extra stimulus … would happen well after the oil price fall had moved through the economy and we would just add unnecessary volatility.’
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low today of 1.9719.
Australian Dollar (AUD) Exchange Rate Edges Lower on Disappointing Data
Australia’s economic data failed to impress on Wednesday, causing the ‘Aussie’ to soften versus most of its major peers. Home Loans declined by -3.5% in January, a larger declination than the median market forecast of -2.0%. Investment Lending cooled by -0.1% in January compared to the 6.4% growth registered previously. In addition, Value of Loans softened by -1.0% on the month in January.
Compounding the ‘Aussie’ depreciation was disappointing data out of China. Of particular detriment to the South Pacific asset was China’s Industrial Production which grew by 6.8% on the year, well below the market consensus of 7.7% growth.
Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast to Advance
Given that sentiment towards the BoE has become increasingly positive over the past few weeks, and with an absence of Australian data to provoke changes, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is likely to trend higher over the course of Wednesday’s trade. With that being said, however, there is the potential for Sterling volatility with the UK’s growth estimate due for publication later on Wednesday.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed to a high of 1.9855.
