‘Aussie’ Buoyant Today as Domestic Unemployment Rate Drops in spite of Interest Rate Worries
Much of the recent market optimism faded overnight, with the ‘Aussie’ (AUD) hit by the Reserve Bank of New Zealand (RBNZ) opting to cut interest rates by 0.25% and consequent concerns as to the influence this decision could have on the stance of the Reserve Bank of Australia (RBA). However, a decreased domestic Unemployment Rate has helped to shore up the antipodean currency to put the GBP/AUD pairing on a severe downtrend this morning, trending at present at 2.1809.
Earlier…
A contraction in UK Manufacturing Production and widened trade deficit has prompted the GBP/AUD currency pair to trend bearishly this morning.
‘Aussie’ (AUD) Boosted by Prospect of New Chinese Stock Market Safeguard Mechanism as Pound (GBP) Fluctuated
Early on Monday the Australian Construction PMI printed well at 53.8, to report significant growth as the sector returned to a state of expansion for the first time in ten months. This naturally offered some strong evidence that the domestic economy has been experiencing definite improvement in spite of global worries. However, as the Shanghai index, and consequently many of the other stock markets across the region, resumed falls after the weekend a general atmosphere of risk aversion descended upon trading. Weakening the ‘Aussie’ (AUD) this turn in sentiment saw the GBP/AUD exchange rate climb to a fortnightly high of 2.2075.
Although the sole UK data release on Tuesday, the BRC Like-for-Like Sales for August, revealed a decided contraction, Sterling (GBP) went on a strong bullish run against rivals throughout the morning. This was likely in response to a potential 3.5 billion Pound Japanese take-over bid for the British insurance firm Amlin, a move that speaks well for the prospects of the domestic economy. Nevertheless the initial burst of investor optimism that pushed the GBP/AUD pairing up was ultimately short-lived, as the ‘Aussie’ was boosted by the news of new protective stock market measures in China that should prevent the occurrence of another Black Monday and increase general stability.
UK Industrial and Manufacturing Production Figures Disappoint as Domestic Deficit Widens to Detriment of GBP/AUD Pairing
This morning was not especially positive for either the ‘Aussie’ or Sterling as domestic data results proved disappointing for both. The Westpac Consumer Confidence Index for September retreated from 99.5 to 93.9, a not unexpected decline given the recent turmoil of the global markets and the prevalent fears of a Chinese slowdown. Both the Australian Home Loans and Value of Loans figures for July also dropped by greater levels than had been forecast, suggesting that the local housing market is less stable than hoped, although there was an increase in Investment Lending.
There was not the turnaround that traders might have wished for in UK data, as both the Industrial and Manufacturing Production figures clocked in with fresh declines. Manufacturing in particular demonstrated an unexpected contraction of -0.5%, another indication that the local economy is struggling to distance itself from global downtrends. Also of note was an increased deficit on the UK Visible Trade Balance, which slipped from -8.5 billion to -11 billion pounds today. Consequently the GBP/AUD conversion rate has continued to shed value, falling to 2.1757.
GBP/AUD Exchange Rate Forecast: Upcoming BoE Data Could Extend Pound Downtrend
With the likelihood of renewed Bank of England (BoE) dovishness on tomorrow’s Rate Decision, and in the following 12-month Inflation Report, the Pound stands to remain soft during the remainder of the week. Although, should the Monetary Policy Committee (MPC) indicate that an interest rate rise remains on the cards for early 2016 there may be the possibility of a rally.
The ‘Aussie’, meanwhile, may have the opportunity to bounce back and capitalise on the weakness of its rival with Thursday’s raft of employment data for August. A strong showing here could propel the GBP/AUD pairing down to further lows ahead of the weekend.
Current GBP, AUD Exchange Rates
At time of writing the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate trending in the range of 2.1816, with the Australian Dollar to Pound Sterling (AUD/GBP) currency pair climbing at 0.4582.
Comments are closed.