Foreign Currency Market Update – GBP / AUD Update
The past week has seen the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate slide overall to bottom out at 2.0234, close to a six-month low, although today has seen a major resurgence up to 2.0514 for the UK currency.
Given that last week was the final one of 2015, economic data was in rather short supply for both Australia and the UK. Despite this, the Australian Dollar actually managed to edge up against the Pound in the closing days of last year due to a favourable rise in the price of iron ore.
One of the only other notable releases to speak of were Sunday 27th’s declining Chinese Industrial Profits on the year in November, which improved slightly from -4.6% to -1.4%. Additionally, Wednesday saw the release of the UK Nationwide House Prices figures for December, which rose by more than forecast on both the month and year.
2016 started poorly for the Australian Dollar, as New Year’s Day saw the announcement of China’s NBS Manufacturing PMI for December, which only rose marginally from 49.6 points to 49.7.
Today, the blow has been far greater with the Caixin Manufacturing PMI for December falling from 48.6 points to 48.2. In both instances, Chinese manufacturing remains under the 50 mark dividing growth from contraction. This is nothing but bad news for the ‘Aussie’, which has been on a solid downtrend today due to concerns relating to the level of demand for Australian iron ore by Chinese factories.
Although the Pound began the week by gaining on both the Australian and New Zealand Dollars, UK data (specifically the Markit Manufacturing PMI for December) has printed poorly. The index has fallen from 52.5 to 51.9, something that has seriously upset forecasts of a rise to 52.8.
This week, Pound Sterling/Australian Dollar exchange rate movement may occur as a result of a number of UK and Australian economic releases.
Tomorrow will bring results from the UK first, in the form of the positively predicted December Markit Construction PMI. Looking ahead further still, Australia’s December AIG Performance of Service Index will be announced. The previous result came in at 48.2 but a rise above the 50 mark could well restore the value of the ‘Aussie’ against its competitors.
On the 6th, the UK will again have input with December’s Composite and Services PMIs; a minor decline has been forecast for the UK’s dominant services sector.
Finally, on the 7th of January, Australia’s annual November Building Approvals will come out, which have been predicted to show a slowdown from 12.3% to 3.9%.
Heads Up
Summary of major upcoming data releases that we think may move the market.