Pound Australian Dollar (GBP/AUD) Exchange Rate Falls following Raft of Data
The Pound Australian Dollar (GBP/AUD) exchange rate is wavering sideways this morning, briefly touching a 22-day low, after slipping overnight.
The movement comes amid positive data from Australia, mixed PMIs from China, and troubling lending figures in the UK.
Australian Dollar (AUD) Firms amid Chinese and Australian Data
The Australian Dollar (AUD) rose against the Pound (GBP) overnight, buoyed by fairly upbeat data from Australia and China.
Australian corporate profits for the first quarter of this year smashed forecasts, printing at 10.2% versus the expected 4%. The strong growth came amid more lifting of lockdown measures, opening up the Australian economy.
China’s latest PMIs may also have helped AUD. Both the manufacturing and services PMIs beat forecasts. Although both surveys still showed contractions in business activity, markets seemed cheered that China’s economy is recovering from recent lockdowns faster than anticipated.
This mixed outlook seems to have lifted the ‘Aussie’ – which is often traded as a proxy for the Chinese economy – against the Pound. However, the upside seems limited.
Pound (GBP) Pressured as Economic Concerns Remain
Turning to the Pound, Sterling slipped to a 22-day low against the ‘Aussie’ earlier this morning before spiking higher and then stabilising to move sideways. However, GBP/AUD still remains down from yesterday.
UK cost-of-living concerns continue to pressure the Pound, despite Rishi Sunak’s support package last week.
Yesterday, the Federation of Small Businesses (FSB) warned that almost 500,000 small UK firms are at risk of collapsing ‘within weeks’ due to soaring costs and falling consumer spending.
Today, the Bank of England’s (BoE) latest lending data is causing concern.
Mortgage approvals fell to their lowest level since June 2020, although markets had expected a modest rise. Meanwhile, consumer credit unexpectedly rose.
https://twitter.com/davidbelle_/status/1531554391764918273
Economists believe the latest data shows that people are less willing to take on mortgages amid the cost-of-living crunch, although households are also taking on more debt in order to cope with rising costs.
Victoria Scholar, Head of Investment at Interactive Investor, commented:
‘Following the lifting of the energy price cap and amid the rising rate environment, demand for mortgages appears to be slowing as the cost-of-living crisis starts to bite.
‘We saw consumer credit increase by £1.4 billion in April ahead of market expectations in the third consecutive above average figure with a notable increase in demand for credit cards as households scramble to cover their costs, worryingly relying more and more on debt.’
This could be applying some pressure to the Pound today.
GBP/AUD Exchange Rate Forecast: Australian GDP in Focus
As today’s session unfolds, risk appetite could begin to influence the pair. Amid worrying inflation data from the Eurozone and the troubling BoE data, the market mood could sour. This may dampen the appeal of the risk-sensitive ‘Aussie’, thereby giving GBP/AUD a lift.
Looking further ahead, Australia’s GDP data overnight could cause some big movement. Economists expect the country’s GDP growth rate to have slowed from 3.4% to 0.7% in the first quarter of this year. Such a result could hurt AUD. Will the figure beat forecasts?