- UK domestic data shows record drop in manufacturing production
- Annual industrial stats similarly poor
- Australian Dollar crumbles on sliding loans results
- NIESR GDP estimate due this afternoon
Pound Sterling’s performance against its peers has been generally disappointing today, with the currency limited by the earlier production results for March.
The Australian Dollar has been faring worse by comparison, however, having dived against all of its peers in the wake of a gloomy forecast for the post-election economy by an opposition MP.
UK Economic News: Pound (GBP) Shaken by Dismal Annual Production Results
The Pound has been a victim of UK domestic data today, having slumped against a large number of rivals after the morning’s March production stats were announced.
Losses recorded in the wake of the news included -0.3% against the US Dollar (GBP/USD), -0.4% against the Euro (GBP/EUR) and -0.9% against the Japanese Yen (GBP/JPY). Sterling’s numerically inferior gains have included 0.3% against the Turkish Lira (GBP/TRY), 0.4% against the Mexican Peso (GBP/MXN) and 0.8% against the South African Rand (GBP/ZAR).
The big news of the day, the manufacturing and industrial production, showed a rise on the month but a more damaging drop on the year for both fields; this elicited a pessimistic response from Capital Economics Economist Ruth Miller, who stated:
‘While ‘Brexit’ uncertainty may be partly to blame, the sector’s poor performance of late is certainly nothing new and many of the headwinds to growth in 2015 emanating from a weak global environment are still in place’.
The fact that manufacturing shrank by -0.4% over the previous quarter only amplified the devaluation of the Pound against its peers.
Australian Dollar (AUD) Crashes despite Highly Positive Confidence Report
The ‘Aussie’ has been in the dumps today, having either made no progress or fallen against all of its usual rivals. Among these declines have been -0.3% against the Canadian Dollar (AUD/CAD) and -0.5% against the Chinese Yuan (AUD/CNY) and Euro (AUD/EUR); the currency has been trending in a tight range against the Pound (AUD/GBP).
This negativity has been present in spite of the latest Westpac consumer confidence index for May jumping from 95.1 points to 103.2, representing the largest individual increase in almost six years.
Less positive have been the falling home loans, investment lending and value of loans results for March, which have combined with a bleak forecast by Shadow Treasurer Chris Bowen that budget cuts would likely be a necessity in the aftermath of the July 2nd election in order to preserve the national credit rating at its current AAA status.
Future GBP, AUD Forecast: UK GDP Estimate and RBA Speech due Next
The next ecostats likely to have an impact on the GBP/AUD pairing will come first from the UK, in the form of this afternoon’s National Institute of Economic and Social Research (NIESR) GDP estimate for April.
Given the recent shortfalls in UK production as well as the growing EU Referendum uncertainty, it seems possible that NIESR will offer a dovish figure.
The next Australian economic event will come early tomorrow, when Reserve Bank of Australia (RBA) Assistant Governor Malcolm Edey is expected to make a speech in Melbourne.
Current GBP, AUD Exchange Rates
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending in the region of 1.9622 and the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate was trending in the region of 0.5099 today.
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