GBP/AUD Exchange Rate Sinks Ahead of US Fed Testimony
The Pound Australian Dollar exchange rate rose today following the publication of the latest preliminary Australian retail sales data for May, which rose by 0.1% – although this fell below forecasts of a 0.7% increase. The pairing is fluctuating around AU$1.84 at the time of writing.
Despite lagging retail sales, many AUD investors still remain confident about the outlook for Australia’s economy, thanks to the easing of lockdown restrictions in key states.
However, analysts at Reuters pointed out that lockdown restrictions had limited the nation’s economic growth in May. They said:
‘Australian retail sales rose less than expected in May, with a snap coronavirus lockdown in the country’s second most populous state of Victoria hurting demand, preliminary data showed on Monday.’
The Australian Dollar (AUD) has risen on growing demand for the risk-correlated ‘Aussie’ today as the outlook for the US economy continues to improve.
However, AUD investors are cautious ahead of the US Federal Reserve’s Chairman Jerome Powell’s testimony before Congress later today.
Any indications that the outlook for the US economy – the largest in the world – remains positive, however, then we could see demand for the Australian Dollar being to pick-up.
Pound (GBP) Exchange Rate Rises on Positive UK Factory Data
The Pound (GBP) rose following the publication of the latest UK factory data, which rose at its fastest rate since July 1975 in the three months leading up to June this year.
Analysts at CBI Economics commented on the data:
‘The improvement in manufacturing demand conditions was also evidenced by total order books in June reaching their strongest outturn since 1988, while export order books improved to their firmest in more than two years.’
Today also saw positive news from UK Health Secretary Matt Hancock, who said that Covid-19 data looks positive for lifting lockdown restrictions on 19 July.
This comes after Prime Minister Boris Johnson said it was ‘looking good’ for the final lifting of lockdown rules next month.
As a result, GBP investors have become more optimistic about the UK economy, despite the four-week delay to the easing of restrictions this month following a surge in the Delta variant of the coronavirus.
UK Covid-19 cases are still rising, but hospitalisations and deaths remain relatively low, thanks to the Government’s extensive vaccination programme earlier this year.
Could we see the GBP/AUD exchange rate head higher this week now that the Government appears more confident about easing lockdown restrictions next month?
GBP/AUD Exchange Rate Forecast: Australian and UK PMI Data in Focus
Australian Dollar (AUD) investors will be eyeing tomorrow’s flash Australian Commonwealth Bank manufacturing and services data for June.
If these indicate an uptick in the outlook for the Australian economy, then we could see the ‘Aussie’ head higher against its peers.
Tomorrow will also see the release of the latest UK services and manufacturing estimates for June.
Any signs of the UK’s largest sector – services – showing strong signs of growth would see the Pound to Australian Dollar exchange rate head higher.
Also, if the Government remains optimistic about lifting lockdown restrictions next month, then the GBP/AUD exchange rate would rise.