Pound Australian Dollar (GBP/AUD) Exchange Rate Dips despite Disappointing Chinese Manufacturing Data

GBP/AUD Exchange Rate Slips as UK Consumer Confidence Falls to Worst Level in Over Five Years

The Pound Australian Dollar (GBP/AUD) exchange rate is down today and is trading around AU$1.8035 on the inter-bank market.

Sterling (GBP) fell against the Australian Dollar (AUD) after today’s printing of UK Gfk consumer confidence figures for January, which showed -14 – its worst level in over 5 years.

Gfk executive, John Stanton, commented:

‘Consumers, companies and corporations thrive on certainty, which is in short supply just two months before the planned date for the UK’s EU exit.’

The Australian Dollar, meanwhile, rose despite the publication of China’s manufacturing PMI figures for January, which revealed an ongoing contraction at 49.5, although this was slightly better than expectations.

Nevertheless, AUD sentiment improved on plans to boost Chinese economic growth by means of monetary stimulus and infrastructure spending, as Kevin Xie, China Economist at Commonwealth Bank, points out:

‘Chinese policymakers have accelerated approvals of infrastructure projects and local government bond issuance in January. These stimulus measures buoyed business expectation in the construction sector.’

AUD traders, meanwhile, will be looking ahead to the publication of Australia’s AiG PMI for January later on today, with any signs of an increase potentially providing further uplift for the ‘Aussie’.

AUD/GBP Exchange Rate Rises US-China Trade Talks Resume

US-China trade talks are once again heating up, one month ahead of the when the ‘trade truce’ is due to end on 1 March, with some ‘Aussie’ (AUD) traders optimistic about the outcome.

Today will see Chinese Vice-Premier Liu He meet US President Donald Trump in the Oval Office – with Chinese officials stating a ‘good conversation’ between the two nations took place yesterday – which has provided a boost for the risk-averse Australian Dollar.

Some AUD traders, however, are remaining cautious as political tensions have fired up between the two countries over the arrest and extradition of Chinese tech giant Huawei’s Chief Financial Officer.

China’s foreign ministry said in a statement:

‘[The US is using] state power to discredit and crack down on specific Chinese companies in an attempt to strangle the enterprises’ legitimate and legal operations.’

The Australian Dollar has, however, managed to hold on to some of yesterday’s gains after the publication of Australia’s yearly CPI figures for the fourth-quarter climbed above expectation.

GBP/AUD Exchange Rate Falls as EU Remains Steadfast on Irish Backstop

Brexit news has continued to dominate the Pound (GBP), however, with no other notable UK data releases to be published today.

Pound traders are focusing on Prime Minister Theresa May as she returns to Brussels to renegotiate crucial aspects regarding the Irish backstop.

Donald Tusk, the President of the European Council, has however warned Theresa May not to get her hopes up, saying in a tweet:

As EU officials are showing increasing reluctance to concede on the issues fundamental to the UK’s newly-amended withdrawal agreement, this has left some GBP investors feeling nervous.

Pound Australian Dollar (GBP/AUD) Outlook: Fears of a Brexit No-Deal Could Send Pound Plummeting

Australian Dollar (AUD) traders will be looking ahead to tomorrow’s publication of the Chinese Caixin manufacturing PMI figures for January, with any signs of a decrease this could see the AUD/GBP exchange rate fall.

Tomorrow will also see the printing of Australia’s Q4 PPI figures, which could provide some uplift for the ‘Aussie’ should they increase.

Pound (GBP) investors, meanwhile, will be keeping a close eye on the publication of the UK manufacturing PMI figures for January tomorrow, which are expected to decrease.

These will be followed by the publication of UK mortgage approvals figures for January.

The GBP/AUD exchange rate will be sensitive to political debates over Theresa May’s Brexit deal for the rest of this week, and with any further signs that the EU will not renegotiate issues over the Irish backstop, fears of a no-deal are likely to increase, potentially sending the Pound lower.

John Cameron

John studied economics at Cambridge University and later became an MSTA qualified Technical Analyst. He began working for TorFX almost a decade ago and now holds a Senior Account Manager position. As well as lending his clients support and guidance, John has produced market commentary and detailed exchange rate analysis for a number of online publications.

Contact John Cameron