Weakening Australian Construction Data Fails to Weigh on ‘Aussie’ (AUD) as GBP/AUD Exchange Rate Continues to Slump
In spite of the Australian Construction PMI having fallen overnight, from 53.8 to 51.9, the GBP/AUD pairing remains on a downtrend in the region of 2.1229.
Earlier…
With no change in policy from the Reserve Bank of Australia (RBA) this morning the GBP/AUD exchange rate has continued to lose ground in the face of an increasingly bullish ‘Aussie’ (AUD).
Trans-Pacific Partnership Agreement Bolstered ‘Aussie’ (AUD) Strength as Pound (GBP) Softened due to Diminished UK Services PMI
Although the September Australian Services PMI showed a decided decline in growth, likely as a result of global slowdown worries, the ‘Aussie’ (AUD) was on strong form on Monday. Last week’s disappointing US Change in Non-Farm Payrolls figure and the consequently lowered expectations of a 2015 interest rate rise from the Fed, helped to buoy the antipodean currency against rivals in spite of an initial increase in market risk aversion. Further weak US data at the start of the week helped to maintain the ‘Aussie’ on a bullish trend, particularly after the agreement of the Trans-Pacific Partnership free trade deal which is expected to provide a good boost to the domestic economy.
Faring significantly worse, the Pound (GBP) was pushed into a slump by the publication of a markedly weakened UK Services PMI. Disappointing expectations of a minor uptick to 56, the index instead printed at 53.3. Given the significance of the service sector within the UK’s GDP this soft showing was received poorly by pundits, driving the GBP/AUD exchange rate to a daily low of 2.1358.
GBP/AUD Pairing at Monthly Low Today after Reserve Bank of Australia (RBA) Holds Interest Rates Steady
This morning provided further support for the antipodean currency when the Reserve Bank of Australia (RBA) elected to leave the domestic cash rate unaltered from its record low of 2%. As policymakers offered little indication of concern this outcome saw the ‘Aussie’ jump against the majors, easing concerns that the central bank might be more inclined to cut rates in the wake of the latest indicators from the Fed and the slowing US economy.
With little domestic stimulus Sterling has remained generally bearish, allowing the GBP/AUD conversion rate to continue ceding ground and drop to a fresh monthly low of 2.1256 today.
GBP/AUD Exchange Rate Forecast: ‘Aussie’ Likely to Remain Dominant Should UK Production Figures Show Fresh Declines
Due for publication this evening is the Australian Construction PMI, which could put a dent in the current bullish run of the South Pacific currency if it proves as unimpressive as the corresponding Services figure. Sustained weakness on upcoming US data would likely keep the ‘Aussie’ strong, as the declining ‘Buck’ reduces some of the external pressure that has been squeezing the antipodean currency in recent months.
Wednesday’s UK Industrial and Manufacturing Production data, alongside the NIESR Gross Domestic Product Estimate for September, may inspire a resurgence for the ailing Pound. However, should the trend of uninspiring domestic results continue the GBP/AUD currency pair could sink to further lows.
Current GBP, AUD Exchange Rates
At time of writing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was on a downtrend around 2.1310, with the Australian Dollar to Pound Sterling (AUD/GBP) pairing making bullish gains in the region of 0.4690.
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