The Pound to Australian Dollar exchange rate was rangebound today as UK manufacturing and service sector PMI data was released this morning.
The pair is currently trading at around $1.7698.
Pound (GBP) Struggles as Data Worse Than Forecasts Predict
The Pound stumbled today as disappointing retail sales and services PMI caused the currency to stutter.
The UK Services PMI fell sharply to 38.8 points in January a contraction of growth in the sector and the biggest fall in eight months., down from 49.4 in December, adding to mounting fears that the UK economy remains strained at the start of 2021.
With investors increasingly concerned about the prospect of a double dip-recession the appetite towards Sterling soured, as an extension of lockdown measures remains a real threat to the economy.
Prime Minister Boris Johnson is expected to lead a press conference at 5pm this afternoon, as the R rate slips back down to 0.8-1 across the UK.
Australian Dollar Struggles from Risk-Off Trade
The Australian Dollar (AUD) found support in the AUD/GBP exchange rate as the disappointing data from the UK, but struggled on its own preliminary data.
A preliminary reading for month-on-month retail sales in Australia showed a decline by 4.2 percent, after a 7.1 percent growth in November, sparking concerns for the state of the Australian economy.
Markets soured today, as the risk of lockdowns around the world, including China, Australia’s largest trading partner is rife, which has caused AUD to suffer.
Fear of Tougher Lockdown Restrictions to Push Down Sterling Further?
Confidence in the outlook of the UK economy could weaken in the coming days if there is any indication that lockdown restrictions will be made tougher, or extended.
All eyes will be on Boris Johnson this afternoon as he leads the daily press conference the UK is so used to.
Further ahead, Pound investors will look to unemployment rate data which will be released on Tuesday.
Forecasts point towards the unemployment rate rising from 4.9% to 5.1% in November, in line with the second national lockdown which took place.
Australian Dollar investors will be looking to next weeks’ inflation rate data which is expected to decline from 1.6% to 0.8%.
AUD investors will also look towards any further updates from the US, as any further news on President Biden’s proposed stimulus could boost demand for the risk-correlated ‘Aussie.’
Markets are expecting a larger, fiscal stimulus policy which is to be announced by the U.S. President, which would generate strong inflation and signal higher interest rates at the Federal Reserve, which could prove relief for the ‘Aussie.’