Pound to Australian Dollar Exchange Rate Investors Await UK, Australian and Chinese Manufacturing Results
UPDATE: The Pound to Australian Dollar (GBP/AUD) exchange rate struggled to hold its ground on Thursday, despite nearing the week’s opening levels again.
GBP/AUD opened the week near the interbank level of 1.76 and touched on that level again on Thursday morning.
However, risk-sentiment and market anticipation for Friday’s upcoming manufacturing results are keeping the Australian Dollar (AUD) appealing, while Sterling (GBP) remains limp.
Friday’s Asian session will see the publication of Australia’s May manufacturing PMI, as well as China’s manufacturing PMI from Caixin.
This is one of China’s most influential manufacturing prints. As China is Australia’s biggest trade partner, the data could have a notable impact on Australian Dollar trade.
Pound Sterling to Australian Dollar Exchange Rate (GBP/AUD) Falls from Highs as Risk-Sentiment Rises
Due to a lack of notable UK data being published this week, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has been driven mostly by risk-sentiment and geopolitical developments since Monday.
GBP/AUD opened this week at the interbank level of 1.76 and has since fluctuated between highs of 1.77 and lows of 1.75. On Wednesday evening, GBP/AUD slumped to its worst level since January.
The pair remained in the region of 1.75 but was trending above its worst levels at the time of writing on Thursday.
Stronger market demand for risk-correlated currencies like the Australian Dollar (AUD) has been the primary cause of GBP/AUD weakness this week.
While Thursday saw the publication of some solid UK consumer confidence data, Sterling’s recovery was limited due to other factors keeping pressure on the British currency.
Pound (GBP) Exchange Rates Fail to Benefit from UK Consumer Confidence
According to May’s UK consumer confidence survey from Gfk, confidence was actually slightly better than expected – or at least, not as bad as expected.
Britain’s consumer confidence survey was forecast to have lightened just slightly, from -9 to -8. The result of -7 was better than predicted and this helped Sterling (GBP) to climb away from its weekly lows.
Generally though, while the results were better than expected, analysts noted that consumers were still feeling pretty negative about Britain’s economy. According to Joe Staton from Gfk:
‘These negative economic scores are depressing the overall index and preventing it from breaking out into positive territory.
We have been at zero or negative for 29 months now. When will the strong jobs market and rising real incomes, coupled with ongoing low interest rates and low levels of headline inflation, have an impact?’
As a result of the general negativity surrounding Britain’s economic outlook, investors still see little reason to buy the Pound.
Sterling has been especially unappealing in recent weeks, as Britain’s economic outlook has worsened and investors are beginning to doubt the Bank of England (BoE) will raise UK interest rates at all this year.
Australian Dollar (AUD) Exchange Rates Supported by Hopes for US-North Korea Diplomacy
Australia’s latest ecostats have been mixed and have not offered the Australian Dollar (AUD) much in the way of domestic support.
Despite this, AUD has advanced against the Pound (GBP) this week thanks to higher demand for risky currencies.
The Australian Dollar is often seen as risky due to its correlation to commodities and global trade.
This week has been a volatile one for risk-sentiment, as major developments in Italian politics and diplomacy between the US and North Korea have hit headlines.
Since the middle of the week, jitters have eased somewhat and investors are becoming more willing to buy into riskier currencies again.
The Australian Dollar has also benefitted from weakness in the US Dollar (USD) since Wednesday. The ‘Greenback’ was sold following a disappointing US growth projection and a slip in Federal Reserve interest rate hike bets.
Pound to Australian Dollar (GBP/AUD) Forecast: Manufacturing PMI Data Ahead
Political uncertainties and a lack of influential data from the UK or Australia so far this week has left the Pound to Australian Dollar (GBP/AUD) exchange rate looking flat for most of the week.
As a result, GBP/AUD could still end the week lower or higher depending on its Friday performance.
Friday will see the publication of this week’s most influential ecostats – manufacturing PMIs for May from Britain and Australia.
Britain’s May manufacturing PMI is forecast to have slowed from 53.9 to 53.5. Australia’s is also expected to slow, but still perform strongly overall.
If Australia’s manufacturing PMI comes in strongly and Britain’s disappoints, GBP/AUD is likely to end the week lower. GBP/AUD will fall further if market appetite for risky currencies persists.
Next week will be bigger for the Pound to Australian Dollar (GBP/AUD) exchange rate, particularly the ‘Aussie’, as the Reserve Bank of Australia (RBA) will hold its June policy decision meeting and Australian growth results will be published.