Pound Australian Dollar (GBP/AUD) Exchange Rate Ticks Upward as Sterling Sentiment Improves
(Article updated 16:35, 30/6/23)
The Pound Australian Dollar (GBP/AUD) exchange rate is grinding higher this afternoon, as a bullish market mood favours the Pound.
As GBP holds an increasingly risk-sensitive nature, these shifts in mood can serve it well. Furthermore, with the UK managing to avoid a winter recession, market and investor sentiment appears to be on the up towards Sterling.
At the time of writing, GBP/AUD is trading at around AU$1.9092, edging higher but remaining in the same boundaries as this morning.
Original article continues below:
Pound Australian Dollar Exchange Rate Narrow amid Underwhelming Chinese Data
The Pound Australian Dollar exchange rate is trapped in narrow boundaries this morning, following a muted set of Chinese PMI flashes.
At the time of writing, GBP/AUD is trading at around AU$1.9074, showing little movement from the morning’s opening rates.
Australian Dollar (AUD) Muted amid Mixed Chinese Data
The Australian Dollar (AUD) is seeing muted trade this morning, following a mixed set of Chinese private sector indexes.
The NBS manufacturing PMI for June hit forecasts of 49, showing a modest uptick from 48.8, while the non-manufacturing index printed at 53.2.
This service sector reading may be weighing on the ‘Aussie’ as it indicates the weakest levels since China jettisoned it’s zero-Covid policy.
Bruce Pang, Chief Economist and Head of Research for Greater China at Jones Lang LaSalle, commented:
‘The June PMI reflects a number of imbalances and weaknesses, such as: the continuous contraction of internal and external demand, an accelerated slowdown in the operations of small enterprises, and continuing increasing pressure on the private economy.’
However, over this morning’s trade the ‘Aussie’ has managed to claw its way back after this data released to the flat trade seen thus far.
Pound (GBP) Underpinned by Confirmation of Q1 Growth
The Pound (GBP) is being underpinned this morning by confirmation that the UK avoided recession over the winter.
The Office of National Statistics (ONS) published the finalised Q1 GDP reading this morning, showing the economy grew by 0.1%.
However, the outlook isn’t especially rosy, as Ashley Webb, UK Economist at Capital Economics, explains:
‘The final Q1 2023 GDP data confirms that the economy steered clear of a recession at the start of 2023. But with around 60% of the drag from higher interest rates yet to be felt, we still think the economy will tip into one in the second half of this year involving a peak-to-trough fall of around 0.5%.’
However, in keeping with this week’s theme, a lack of fresh data drivers may be limiting Sterling’s appeal today.
GBP/AUD Exchange Rate Forecast: RBA Rate Decision in Focus
Looking ahead to early next week for the Australian Dollar, the Reserve Bank of Australia are in the spotlight.
The RBA are expected to hike rates by 25bps again, which could strengthen the ‘Aussie’ if they follow through. Similarly, hawkish forward guidance would also likely strengthen AUD. However, if they enact a pause then AUD rates could plummet.
Elsewhere, the latest Caixin manufacturing PMI is scheduled to release on Monday. This could weigh on the ‘Aussie’ if it slows as forecast, by reflecting limited growth in the economic superpower.
For the Pound, data releases are set to remain thin on the ground early next week. Because of this, Sterling could want for clear directional movement, or be left more susceptible to shifts in market mood.
As Sterling holds an increasingly risk-sensitive nature, a shift to bullish trade could strengthen GBP exchange rates.