Pound Australian Dollar (GBP/AUD) exchange rate subdued following UK and Australian PMIs
The Pound Australian Dollar (GBP/AUD) exchange rate is trading sideways this morning following the release of both UK and Australian manufacturing PMI data.
At the time of writing the GBP/AUD exchange rate is trading at $1.9426, virtually unchanged from this morning’s opening rate.
Pound (GBP) rangebound following manufacturing PMI
The Pound (GBP) is trapped in a narrow range this morning following the release of the UK’s final manufacturing PMI.
The index printed at 47.5 in February, slightly higher than the previous month’s figure of 47, and slightly above expectations it would only increase to 47.1.
With the data printing below the 50.1 mark that indicates growth, this morning’s index has confirmed that the UK manufacturing sector remained in contraction territory for a 19th consecutive month, weighing on the Pound this morning.
Rob Dobson, Director at S&P Global Market Intelligence, commented:
‘UK manufacturers faced challenging circumstances in February, as the ongoing impact of the Red Sea crisis delayed raw material deliveries, inflated purchase prices and impacted production capabilities. There were also knock-on effects for demand, as new export orders were hit by both supply disruptions and higher shipping costs.’
Dobson also cited increasing input cost inflation as a reason for the contraction, suggesting that it is ‘too early to be confident on the timing of interest rate cuts’ from the Bank of England (BoE).
Australian Dollar (AUD) flat following contraction in PMI
Similarly to the Pound, the Australian Dollar (AUD) is treading water this morning following the release of Australia’s final manufacturing PMI for February.
Released late on Thursday evening, February’s figure confirmed that the manufacturing sector had also remained in contraction territory, with the index coming in at 47.8.
The slump comes following January’s positive reading of 50.1, however the data printed higher than an expected reading of 47.7.
Confirmation that Australia’s manufacturing sector contracted in February has limited AUD movement, and a further absence of macroeconomic data is leaving the ‘Aussie’ with nowhere else to go.
GBP/AUD exchange rate forecast: services PMI to bolster GBP and AUD?
Looking ahead, the primary catalyst of movement in the first few days of next week for the Pound Australian Dollar exchange rate, will likely be the release of Australian and UK final services PMI.
The data is expected to confirm Australia’s services sector returned to growth in February, potentially lending support to the ‘Aussie’.
Turning to the Pound, on Tuesday the UK’s services PMI for February is also scheduled for release.
Similarly to the Australian release, the UK services PMI is expected to confirm UK service sector activity continued to expand at a healthy pace last month. Could this bolster confidence that the UK recession is over and support the Pound in the first half of next week’s session?