The Pound to Australian Dollar (GBP/AUD) exchange rate was volatile today as the UK manufacturing PMI data added support to Sterling’s movement, though risk-on trade has sent the GBP/AUD exchange rate lower.
At the time of writing the pair are currently trading at around AU$1.8074.
Pound (GBP) Finds Support in Manufacturing PMI
The Pound found support in the final UK manufacturing PMI for February, as investors brace for Chancellor Rishi Sunak’s spring budget on Wednesday, while it has received support, increased risk appetite means GBP is down against the risk-sensitive Australian Dollar
The IHS Markit UK Manufacturing PMI came in at 55.1 in February of 2021 up from 54.1 in January.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply commented on the data, saying:
‘Only the pincer movement of rising costs and supply chain disruptions in the manufacturing sector prevented higher growth in February as mounting optimism amongst manufacturers raised hopes of an imminent future recovery.’
‘We will see what support next week’s budget from the chancellor will offer businesses and consumers to bring more life to the UK economy.”
Wednesday will see Chancellor Rishi Sunak announce his spring budget for 2021 where he is set to unveil more measures to help support UK’s economic recovery, such as extending furlough to support those affected by the coronavirus pandemic.
Any further indication from Sunak that the UK’s economic recovery remains uncertain would drag down Sterling.
Australian Dollar (AUD) Investors Await RBA Interest Rate Decision
Australian Dollar investors eagerly await the Reserve Bank of Australia’s (RBA) interest rate decision tomorrow morning, with the bank expected to hold rates at 0.1%.
Though, if the RBA strikes a dovish tone in its monetary policy statement, then we could see the ‘Aussie’ shed any of its gains.
The Australian Dollar remains volatile as the US Dollar pushes higher and any further rises in US treasury yields could send the Australian Dollar lower once more.
However, the Australian Dollar has found support at the start of this week as commodity prices surge higher.
Pound to Australian Dollar Outlook: Australian GDP Data in Focus
Pound investors will, as mentioned, be focusing on Chancellor Rishi Sunak’s spring budget on Wednesday, with any pessimistic commentary surrounding the UK’s economic recovery adding pressure to Sterling.
Australian Dollar investors will too be looking towards Wednesday’s Australian GDP Growth release for Q4.
GDP in Australia for Q4 is forecast to have grown 2.2%, a slowdown from the 3.3% recorded in Q3, if the figures beat forecasts the ‘Aussie’ could find larger support. GBP/AUD exchange rate movement will also be dictated by global-risk sentiment, with global markets becoming increasingly optimistic surrounding Biden’s proposed stimulus package, the risk-correlated Australian Dollar could benefit from a risk-on mood.
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