Pound Australian Dollar (GBP/AUD) Exchange Rate Dips Despite Signs of Chinese Manufacturing Weakness
The Pound Australian Dollar (GBP/AUD) exchange rate is weakening this morning, despite signs of further slowdown in China’s manufacturing sector.
At the time of writing, GBP/AUD is trading at around AU$1.9132, falling by just under 0.3% from this morning’s rates.
Australian Dollar (AUD) Undermined by Downbeat Chinese Data
Bar gains against the Pound (GBP), the Australian Dollar (AUD) is narrowing this morning, amid downbeat Chinese economic data.
In November, the manufacturing sector was found to have contracted further, with the NBS PMI printing at 49.4.
Zhao Qinghe, senior statistician at the National Bureau of Statistics, commented:
‘Survey results show that more than 60% of manufacturing companies reported insufficient market demand. Insufficient market demand is still the primary difficulty affecting the current recovery and development of the manufacturing industry.’
Due to AUD’s nature as a Chinese proxy-currency, continually downbeat news around the superpower’s economic recovery sap sentiment towards it. Similarly, weakness in the Chinese service sector appears to remain notable and outweighs strength in construction.
However, Chinese business confidence is increasing, pointing to a better outlook in the future. This, in tandem with the morning’s cautiously upbeat market mood could serve to offset these losses, cushioning the ‘Aussie’.
Pound (GBP) Dips amid Lack of Data
The Pound is trending lower this morning, as a lack of impactful data leaves it exposed to market dynamics.
Ahead of the latest US core PCE price index, markets are remaining cautious and moving away from Sterling.
Furthermore, continued adjustment of Bank of England (BoE) rate cut bets is likely weakening Sterling. Analysts have begun to price in upwards of 100bps of easing beginning in August 2024, as UK inflation continues to cool significantly.
This runs in countenance to recent hawkish commentary from BoE policymakers, who have aimed to push back against this speculation.
Ultimately, the continued absence of data releases is the main weight on Sterling this morning. With little to spark interest in GBP, the Pound is left to weaken against most peers.
Pound Australian Dollar Exchange Rate Forecast: Market Dynamics to Drive Sterling?
Looking ahead for the Pound, the data calendar is set to remain sparse through to the end of the week’s session.
This is likely to leave Sterling to trade on risk appetite, and any other external factors. Bullish trade could lift the increasingly risk-sensitive Pound, but a souring market mood may weaken it against its peers.
The Australian Dollar, meanwhile, may gain ground if the Chinese Caixin Manufacturing PMI shows signs of increased activity.
In November, economists forecast the sector’s index to have increased to 49.8, which could lift AUD. However, as this morning’s NBS PMI missed forecasts, this could slip further and weaken the Chinese proxy-currency.