GBP/AUD Exchange Rate Steady on Stronger-than-Expected UK PMI Figures
The Pound to Australian Dollar (GBP/AUD) exchange rate is holding steady this morning following the publication of some surprising upbeat PMI figures from the UK.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8022, virtually unchanged from this morning’s opening rate.
Pound (GBP) Stable after Upbeat PMI figures
The Pound (GBP) has found steady ground this morning as markets welcome the release of the UK’s latest PMI figures.
According to data published by IHS Markit, the factory sector saw some very modest growth this month as the manufacturing index climbed from 40.7 to 50.1, just about the 50 marker which separates growth from contraction.
The accompanying service sector index also jumped this month, with a surge from 29.0 to 47.0 as non-essential shops began to reopen.
🇬🇧 IHS Markit's Flash UK #PMI rose considerably to 47.6 in June ⬆️ from 30.0 in May, to signal a vastly improved picture for the UK economy. Manufacturers saw a return to growth as services firms faced the softest downturn since February. Read more: https://t.co/MsnWgsB7yp pic.twitter.com/E4aDvnMeJq
— IHS Markit PMI™ (@IHSMarkitPMI) June 23, 2020
Chris Williamson, Chief Business Economist at IHS Markit, comments:
‘June’s PMI data add to signs that the economy looks likely return to growth in the third quarter, especially given the further planned easing of the lockdown from 4th July. June saw a record rise in the PMI for a second successive month, confirming that the economy is moving closer to stabilising after the worst of the immediate economic impact from the COVID-19 pandemic was felt back in April.’
However, while June has seen a notable improvement in economic activity, analysts warn there is still uncertainty ahead, with demand likely to remain weak and the threat of job losses likely to limit the extent of the private sector’s recovery.
Australian Dollar (AUD) Flat Amidst US-China Trade Deal Confusion
At the same time, the Australian Dollar (AUD) is holding in a narrow range this morning amidst confusion over the state of the US-China trade deal.
This followed comments from White House trade adviser Peter Navarro, who appeared to announce that the deal was ‘over’ due to Beijing’s handling of the coronavirus outbreak.
This led to a quick rebuttal from White House officials and President Trump himself, with Navarro claiming his comments had been taken out of context.
The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!
— Donald J. Trump (@realDonaldTrump) June 23, 2020
GBP/AUD Exchange Rate Forecast: UK to Further Ease Lockdown Measures?
Still to come today, we have Boris Johnson’s latest coronavirus briefing, in which the PMI is expected to outline a further easing of the coronavirus lockdown.
Johnson will reportedly announce that Cinemas, museums and galleries will be able to open their doors from 4 July, while also detailing how parts of the hospitality sector can begin reopening following a review of the 2m distancing rule.
This may help to give the Pound to Australian Dollar (GBP/AUD) exchange rate a leg up this afternoon as it would bolster hopes that the UK service sector could also return to growth next month.
Meanwhile, in the absence of any notable domestic data, the Australian Dollar is likely to remain highly sensitive to market sentiment this week, potentially struggling in the coming days if second wave fears continue to temper investor optimism.