Pound Australian Dollar Exchange Rate Buoyed by Soft AUD Services PMI
The Pound Australian Dollar (GBP/AUD) exchange rate is trading with modest gains so far this morning amid some disappointing Australian data.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9051. Up roughly 0.3% from today’s opening rate.
Australian Dollar (AUD) Subdued as Service Sector Growth Slows to a Crawl
The Australian Dollar (AUD) stumbled in overnight trade, following the release of Australia’s latest PMI figures.
June’s finalised services PMI saw the index revised down from 50.7 to 50.3. Indicating service sector growth was all but erased last month.
The abysmal reading is likely to complicate matters for the Reserve Bank of Australia (RBA), which surprised markets by leaving interest rates on hold yesterday.
Also applying pressure to the ‘Aussie’ overnight was the publication of China’s Caixin services PMI. June’s figures reported services sector growth slowed at a much faster-than-expected pace.
Further signs of weakness in China’s economy are worrying to AUD investors due to Australia’s close trading relationship with the country.
Pound (GBP) Resilient Despite Confirmation of Service Sector Slowdown
The Pound (GBP) is able to capitalise on the Australian Dollar’s weakness this morning, despite the UK’s own services PMI also pointing to a moderation of activity.
The final release of June’s services PMI came in at 53.7. Down from 55.2 in May, but in line with the preliminary estimate.
June’s figures reported that while the UK’s services sector growth proved more resilient than in some other countries, there are signs of underlying weakness.
Dr John Glen, Chief Economist, Chartered Institute of Procurement and Supply (CIPS), commented:
‘Concerns that the engine of growth in the UK economy could be showing signs of slowdown were realised last month with the weakest rise in new orders since January. Though the sector remained in expansion mode, customer appetite to spend had decreased with concerns over interest rates and cost of living rises affecting household budgets.’
With recession fears still swirling, signs of slowing UK service sector growth will do little to cheer GBP investors.
Pound Australian Dollar Forecast: Weak Trade Figures to Drag on the ‘Aussie’?
The release of Australia’s latest trade figures could help propel the Pound Australian Dollar (GBP/AUD) exchange rate higher in the latter half of the week.
May’s figures are forecast to report a modest narrowing of Australia’s trade surplus. But it will be the accompanying export figures which will likely be the main focus.
If export growth sees another worrying slump this could raise concerns about the resilience of the Australia’s export driven economy. In turn, this could weaken RBA rate hike bets and pull AUD lower.
In the meantime, the minutes from the Federal Reserve’s June policy meeting could inject some volatility into the ‘Aussie’ later this evening. A hawkish consensus from Fed policymakers is likely to weaken market risk appetite and pull the Australian Dollar lower.
Meanwhile, ongoing UK economic jitters may suppress demand for the Pound, in the absence of any GBP data of note.