GBP/AUD Exchange Rate Strengthens in the Wake of Lacklustre Chinese Data
The Pound Australian Dollar (GBP AUD) exchange rate is trending higher this morning as some dire Chinese data pressures the ‘Aussie’.
At the time of writing the GBP AUD exchange rate is trading at around AU$1.7568, up roughly 0.3% from this morning’s opening levels.
Australian Dollar (AUD) Stumbles on Weak Chinese PMIs
The Australian Dollar (AUD) is trading on the back foot this morning, after stumbling in overnight trade in response to the latest Chinese PMI releases.
The National Bureau of Statistics (NBS) reported China’s manufacturing and services indexes fell to 49.5 and 48.4, respectively in March. The slump came as Beijing’s zero-Covid policy plunged parts of the country back into lockdown, limiting economic activity.
This was the first time both indexes fell below the 50-point mark -which separates contraction from growth- in almost two years.
Zhao Qinghe, senior NBS statistician, commented:
‘Recently, clusters of epidemic outbreaks have occurred in many places in China, and coupled with a significant increase in global geopolitical instability, production and operation of Chinese enterprises have been affected.’
The release had pressured the ‘Aussie’ as AUD investors fear the slump will impact demand for key Australian exports such as iron ore.
In additional, a softening of commodity prices has also exerted pressure on the Australian Dollar this morning.
Pound (GBP) Bolstered by Upbeat GDP Release
At the same time, the Pound (GBP) is drawing support from the latest UK GDP release this morning.
The finalised figures for the last quarter of 2021 saw growth revised up from 1% to 1.3%, while Q3 growth was revised to 0.9%.
The surprise uptick in growth has been welcomed by GBP investors, as it sees the UK economy expand by 6.6% through 2021, slight ahead of expectations.
However, the upside in Sterling may be tempered by a downwards revision to consumer spending. Spending growth was revised down from 1.2% to 0.5%, stoking concerns the UK’s cost-of-living crisis may have begun to bite earlier than previously thought.
Paul Dales, senior UK economist at Capital Economics, said:
‘The upward revision to GDP growth in Q4 of last year may not be as encouraging as it looks as a lot of it appears to be due to inventories while consumer spending was revised down. The latter suggests the squeeze on real incomes is starting to bite, although the fall in the saving rate is providing a cushion.’
Pound Australian Dollar Forecast: GBP/AUD Exchange Rate to be Driven by Market Sentiment
Looking ahead to the end of the week, a lull in notable data could limit movement in the Pound Australian Dollar exchange rate.
The pairing will likely take its cues from global risk appetite, with Sterling sentiment potentially improving so long as nothing undermines Ukraine-Russia peace talk optimism.
Meanwhile, the Australian Dollar may face an uphill battle so long as commodity prices continue to weaken.