Pound Australian dollar (GBP/AUD) exchange rate flat as Chinese manufacturing sector grows
The pound Australian dollar (GBP/AUD) exchange rate is trading narrowly this morning, amid news of robust Chinese manufacturing sector growth.
At the time of writing, GBP/AUD is trading at around AU$1.9328, showing little movement from today’s opening levels.
Australian dollar (AUD) underpinned by growing Chinese manufacturing sector
The Australian dollar (AUD) is being supported this morning by the latest Chinese services PMI, which improved in line with forecasts.
In March, the Chinese service sector grew to 52.7, up from 52.5 in February. This marked the 15th consecutive month of growth in the sector.
Dr Wang Zhe, Senior Economist at Caixin Insight Group, commented that:
‘Growth of supply and demand picked up pace. Improved market demand drove a continuous increase in supply. Business activity and total new orders both grew for the 15th straight month, while exports continued to grow amid a recovery of the global economy, pushing the corresponding measure to its highest level since June.’
This is allowing the risk-sensitive ‘Aussie’ to remain afloat despite an increasingly sour market mood, due to its nature as a Chinese proxy-currency.
Markets are looking ahead to the latest US economic data, which could sway the direction of future Federal Reserve interest rate cuts.
Pound (GBP) tepid amid lack of data
Data releases remain few and far between for the pound (GBP) today, which is serving to keep it flat against its peers.
This is leaving Sterling to trade at the behest of the market mood. Due to its increasingly risk-sensitive nature, GBP is being undermined by downbeat trading conditions.
Alongside anticipation of the afternoon’s US data, the largest earthquake in 25 years struck Taiwan earlier in the session.
As Taiwan plays a major role in the global economy due to being a manufacturing hub for computer chips, evacuations from major manufacturers are prompting concern over future supplies.
Taiwan Semiconductor Manufacturing Co’s share price dropped by 1.3% earlier, as the company continues to analyse the resulting impact.
Ultimately, however, minimal domestic data is keeping investors attention elsewhere, leaving the pound adrift. This is likely to continue through today’s trade, as GBP trades in tandem with the market mood.
Pound Australian dollar exchange rate forecast: AU trade data in focus
Looking ahead for the Australian dollar, the main driver of movement is likely to be the latest trade data, due on Friday.
In February, the Australian trade surplus is expected to have narrowed from AU$11.027 billion down to AU$10.4 billion. This could indicate weakening trade relations with other countries, and prompt the ‘Aussie’ to fall against its peers.
For the pound, a lack of other data is likely to push the focus on the final services PMI print. If this confirms that sector activity slowed in March, GBP could soften.
Elsewhere, the same light data calendar may keep Sterling limited in its movements, as investors seek more reactive opportunities.