Pound Australian dollar (GBP/AUD) exchange rate muted following UK and Australian PMIs
The pound Australian dollar (GBP/AUD) exchange rate is trapped in a narrow range this morning following the publication of the UK’s and Australia’s latest services PMIs.
At the time of writing the GBP/AUD exchange rate is trading at $1.9017, virtually unchanged from this morning’s opening rate.
Pound (GBP) subdued despite upbeat PMIs
The pound (GBP) is struggling to garner investor attention this morning despite the UK’s latest services PMI printing above its preliminary estimate.
The index dropped slightly from 52.9 in May down to 52.1 in June, however this beat preliminary forecasts itit would drop to 51.2.
Joe Hayes, Principal Economist at S&P Global Market Intelligence said:
‘We’re on track for another quarter of GDP growth, according to Composite PMI data for the three months to June, albeit one that will be less punchy than the first quarter’s 0.7%. “Prices still continue to show a high degree of stickiness across the UK service sector, although input cost inflation once again trended lower in June.’
However, despite the continued expansion in the service sector, GBP investors were reluctant to place any aggressive bets ahead of the UK’s general election tomorrow.
Australian Dollar (AUD) firms following PMIs
The Australian dollar (AUD) is ticking up against the majority of its peers this morning following Australia’s finalised Judo Bank services PMI.
Although the index fell from 52.5 down to 51.2 in June, the survey remained in expansion territory (a score above 50) which is lending the ‘Aussie’ some modest support this morning.
Matthew De Pasquale, Economist at Judo Bank commented:
‘Key activity indexes for the services sector softened in June but remained above the neutral level of 50. For the past five months, services sector businesses have seen, on average, a monthly expansion in activity levels and improved trading conditions. Despite the dip in June, we anticipate that activity will continue to expand over the coming months as government cost of living support and tax cuts flow through to households and business activity.’
Also underpinning the risk-sensitive Australian Dollar this morning is a sense of market optimism, amid hopes US interest rates will start falling in the coming months.
GBP/AUD Exchange Rate Forecast: UK election in the spotlight
Looking ahead, the UK’s general election will be in the spotlight in the second half of the week, and could trigger some volatility in the pound Australian dollar exchange rate.
As a Labour government is heavily priced in, any surprises on Friday could see GBP exchange rates fluctuate at the end of the week.
Turning to the Australian dollar, Australia’s balance of trade data is scheduled for release on Thursday.
Markets expect Australia’s trade surplus to widen from AU$6.54 billion to AU$6.67 billion, which may offer some modest support to AUD exchange rates.
However, on Friday, Australia’s latest retail sales data is expected to confirm a 0.6% rise in sales growth, which could bolster the ‘Aussie’ at the end of the week.