Pound Australian dollar (GBP/AUD) strengthens following PMI releases
The pound Australian dollar (GBP/AUD) exchange rate is gaining ground this morning following the latest batch of preliminary PMIs in both the UK and Australia.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9556, up approximately 0.2% from this morning’s opening rate.
Pound (GBP) edges higher amid services growth
The pound (GBP) is trending higher this morning following a robust set of preliminary PMIs in the UK.
Services activity accelerated in July, with the index rising from last month’s reading of 52.1 to 52.4.
Meanwhile, manufacturing activity rose more than forecast, as activity jumped to 51.8, surpassing market projections of a more 51.1, with output expanding from June’s reading of 50.9.
Signs of substantial growth in the UK’s private sector are lending GBP support this morning, reinforcing a sense of British economic optimism hot on the heels of a better-than-forecast domestic GDP release.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:
‘The flash PMI survey data for July signal an encouraging start to the second half of the year, with output, order books and employment all growing at faster rates amid rebounding business confidence, while price pressures moderated.
The first post-election business survey paints a welcoming picture for the new government, with companies operating across manufacturing and services having gained optimism about the future, reporting a renewed surge in demand and taking on staff in greater numbers.’
Australian dollar (AUD) stymied by easing private sector growth
The Australian dollar is struggling to garner investor interest this morning in the wake of a worse-than-forecast services PMI.
The index showed that activity in the services sector slowed more than forecast this month, dipping slightly below projections of a 50.9 reading to 50.8, and retreating from 51.2 in June.
Meanwhile, the manufacturing PMI rose from 47.2 in June to 47.4 in July, signalling a slightly softer declaration this month. This saw the composite PMI, which takes both manufacturing and services into account, fall to a six-month low, leaving the ‘Aussie’ to extend its recent losses this morning.
Warren Hogan, Chief Economic Advisor at Judo Bank said:
‘Weaker activity results are not translating into a notable fall in inflation pressures across the business community. Input prices jumped across the board in July, likely reflecting new labour, energy, and transport cost arrangements that went into effect on 1 July.’
Elsewhere, a downbeat market sentiment is applying additional pressure to the risk-sensitive Australian dollar, leaving AUD on the back foot once again.
Pound Australian dollar exchange rate forecast: UK business optimism in focus
Looking ahead, the Confederation of British Industry’s (CBI) business optimism index is due for release tomorrow morning, and may draw investor interest amid a lack of wider releases. The index is due to highlight another sharp rise in the outlook of UK businesses during the third quarter. Economists expect to see the survey rise from 9 to 15, sharply surpassing the six-month high touched in June.
Looking to Australia, a lack of fresh economic data may leave the acutely risk-sensitive ‘Aussie’ vulnerable to global risk dynamics. Could bullish trading conditions see AUD recoup some of its recent losses?