Pound Australian dollar (GBP/AUD) exchange rate touches fresh monthly high as US data beats forecasts
(Article updated 16:10, 5/6/2024) The pound Australian dollar (GBP/AUD) exchange rate is climbing higher this afternoon, as an increased demand for the US dollar (USD) tempers ‘Aussie’ exchange rates.
A better-than-forecast ISM services PMI in the US saw the ‘greenback’ rally amid signs of increasingly robust economic activity in the American, in turn denting the Australian dollar (AUD), as investors favoured the more resilient USD.
Anthony Nieves, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee, said:
‘The increase in the composite index in May is a result of notably higher business activity, faster new orders growth, slower supplier deliveries and despite the continued contraction in employment. Survey respondents indicated that overall business is increasing, with growth rates continuing to vary by company and industry.’
Going forwards, Australia’s latest trade data could drive AUD movement, with a forecast decrease in exports likely to dent the ‘Aussie’.
At the time of writing, GBP/AUD is trading at around AU$1.9231, up 0.2% from the morning’s opening levels.
Original article continues below:
Pound Australian dollar exchange wavers as Australian GDP misses forecasts
The Pound Australian dollar (GBP/AUD) exchange rate is volatile this morning in the wake of the latest Australian GDP data.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9204, virtually unchanged from this morning’s opening rate.
Australian dollar (AUD) edges higher despite weak GDP
The Australian dollar strengthened overnight following the latest Australian GDP prints.
The Australian economy expanded by 0.1% during the first quarter of 2021, missing market projections of 0.2% and falling from the previous quarter’s upwardly revised 0.3% growth. The data marked the tenth consecutive month of domestic quarterly growth, though showed the softest expansion in six months.
However, AUD garnered some investor interest during overnight trade as Reserve Bank of Australia (RBA) Michelle Bullock reiterated the central bank’s focus on stubborn AU inflation.
Bullock said:
‘If it turns out, for example, that inflation starts to go up again, or it’s much stickier than we think and we’re not getting it down, then we won’t hesitate to move rates again.’
In addition to this, a strong Chinese Caixin services PMI lent the ‘Aussie’ some additional support, due to AUD’s status as a proxy currency for the Chinese economy. The index rose more than expected to 54 in May, marking a seventeenth consecutive expansion amid a surge in new business and new exports orders.
Elsewhere, a cautiously upbeat market sentiment lends the acutely risk-sensitive ‘Aussie’ some additional support this morning, allowing AUD to tick up against its safe-haven peers.
Pound (GBP) stunted by services slowdown
The pound (GBP) is struggling to attract investor support this morning following the release of the finalised UK services PMI.
The index fell to 52.9 in May, confirming a sharp slowdown in the vital services sector last month, as activity retreated from April’s one-year high of 55.
While the index remained safely in expansion territory, the notable slowdown leaves markets mulling over how the Bank of England (BoE) may respond to easing inflationary pressures.
Joe Hayes Principal Economist at S&P, said:
‘That’s now three months on the trot that selling price inflation in the service sector has eased – this will be very encouraging to the (BoE’s) Monetary Policy Committee and suggests the trajectory of services prices is moving in the right direction.’
With UK data in short supply for the remainder of the session, the pound may continue to face headwinds.
Pound Australian dollar exchange rate forecast: AU trade data in focus
Looking ahead, the latest Australian trade data is due for release overnight. A forecast easing of AU exports in April may weigh on AUD, due to the export-heavy nature of the economy.
Looking to the UK, an ongoing data lull may see GBP struggle to find a clear direction in the coming days. This could see Sterling trade mostly on global risk dynamics, in addition to shifting BoE interest rate cut speculations.
An upbeat market sentiment may see the less risk-sensitive Pound falter against its riskier rivals, such as the highly risky ‘Aussie’, while strengthening against its safer peers.