The Pound Australian Dollar exchange rate has strengthened since markets opened this morning as UK PMI’s pointed towards a sustained growth in the economy.
At the time of writing the GBP/AUD pairing are trending around the AU$1.8505 level as flash Australian PMI figures miss forecasts.
Pound (GBP) Supported by UK PMI Figures
The Pound has found itself supported against many of its rivals this morning following the release of flash Markit PMI data from the UK.
Whilst the private sector eased from record highs of 62.9 to 61.7, the figure was still one of the strongest monthly improvements seen in over 20 years.
Chris Williamson, Chief Business Economist at IHS Markit, commented on the latest data saying:
‘Businesses are reporting an ongoing surge in demand in June as the economy reopens, led by the hospitality sector, meaning the second quarter looks to have seen economic growth rebound very sharply from the first quarter’s decline.’
‘There are some signs that the rate of expansion appears to have peaked, as both output and new order growth cooled slightly from May’s record performances, but full order books and a further loosening of virus-fighting restrictions should nevertheless help ensure growth remains strong as we head through the summer.’
Australian Dollar (AUD) Weakens Despite Positive Australian PMI’s
The Australian Dollar has weakened against the Pound this morning following the release of Australia’s latest flash Markit PMI figures for June.
Despite the flash PMI’s showing a sustained output growth in the private sector, concerns over the coronavirus pandemic and supply-chain delays softened the pace of output.
The flash services PMI came in at 56.1 points in June, easing from 58.0 to a three-month low, but above the PMI average.
Jingyi Pan, Economics Associate Director at IHS Markit, commented on the preliminary figures saying:
‘Australia’s private sector growth momentum further eased in June but remained at a strong level to indicate continued improvement in economic conditions during the recovery from the COVID-19 pandemic.’
‘Renewed movement restrictions in the Victorian state and supply constraints stood out as two key reasons weighing on the growth momentum for Australia in the June flash PMI data, which is worth scrutinising.’
A softer US Dollar has limited any major ‘Aussie’s’ losses since markets opened this morning.
Pound Australian Dollar Exchange Rate Outlook: BoE Interest Rate Decision in Focus
For Pound investors, tomorrow’s Bank of England (BoE) interest rate decision is expected to be the main catalyst for movement.
Whilst interest rates are not expected to be changed from the low of 0.1%, all eyes will be on the commentary from the BoE and the stance the bank takes.
If the BoE continues to be hawkish in their comments on the UK’s economic recovery the Pound will head higher.
A quieter end of the week for the Australian Dollar will see traders sorely invested in the global market mood over the coming days.