GBP/AUD Exchange Rate Near Opening Levels despite Construction Sector Disappointment
UPDATE: The Pound Sterling Australian Dollar (GBP/AUD) exchange rate has held close to opening levels today, with negative UK and Australian developments keeping both currencies in check.
On the UK side, August’s construction PMI has shown a larger-than-expected slowdown which has unnerved GBP traders.
The Australian Dollar has also faced strong headwinds during trading today – low risk sentiment has reduced demand for the Australian currency, leaving it steady against the Pound.
No Change from Reserve Bank of Australia Brings AUD/USD Exchange Rate Losses
The Australian Dollar (AUD) has fallen by -0.4% against the US Dollar (USD) today, hitting an interbank exchange rate of $0.7181. This remains near the lowest level of trading since March 2016.
The latest negative news has come from the Reserve Bank of Australia (RBA), which left interest rates at 1.5% during its latest policy meeting.
The main issue here has been a lack of adjustment to the RBA’s minutes, with officials reportedly believing that:
‘The low level of interest rates is continuing to support the Australian economy.’
The odds of an interest rate hike in 2019 are falling, which has been a major factor behind today’s AUD/USD exchange rate decline.
US Dollar to Australian Dollar (USD/AUD) Exchange Rate Rises by 0.4% on Trade Tensions
The US Dollar (USD) has advanced against the Australian Dollar (AUD) and most other peers today, thanks to safe haven demand pushing up interest in the US currency.
Ongoing concerns about an escalating international trade conflict have reduced risk sentiment so far this week, boosting the US Dollar despite the US being the instigator of these issues.
The two main concerns for USD traders at present are whether there could be an escalation of US-Chinese trade tariffs, and if Canada will be included in a revised North American Free Trade Agreement (NAFTA).
Recent talks between the US and China haven’t brought any clear signs of de-escalation, so fears about worsening conditions in the future are by no means unfounded.
Australian Dollar to US Dollar Forecast: Will AUD/USD Exchange Rate Recover on US PMI Disappointment?
The Australian Dollar (AUD) could rise against the US Dollar (USD) later today, providing that the afternoon’s US manufacturing PMI is as weak as it is expected to be.
Analysis companies Markit and ISM will both be releasing their August manufacturing PMI stats during the afternoon and both are predicted to show a slowdown during the month.
Neither reading is expected to fall close to the sub-50 point contraction range, but US Dollar demand could still fall on such disappointing news.
This might enable an AUD/USD exchange rate rise ahead of this evening’s Australian services index.
Also covering August, services sector activity is predicted to show a slight decline from 53.6 points to 53.3.
This result could cause a temporary Australian Dollar dip, ahead of potentially greater losses if Wednesday’s early AU GDP data shows a slowdown in Q2 2018.