GBP/AUD Exchange Rate Rises as Poor Chinese Data Drives AUD Down
The Pound Australian Dollar (GBP/AUD) exchange rate rose sharply this morning as AUD lost support off the back of Chinese losses.
At the time of writing, the Pound trades at AU$1.8626, up 0.5% from today’s opening levels.
Australian Dollar (AUD) Dips as China’s Economic Recovery Loses Steam
Despite the printing of positive Australian data this morning, The Australian Dollar (AUD) has fallen against the Pound as poor Chinese data weighs on the ‘Aussie’. As the Australian Dollar’s biggest trading partner, China’s economic situation is liable to drive AUD movement.
Unemployment in Australia fell less than expected in June and employment change figures were positive: yet neither of these figures succeeded in bolstering the currency. More influential was the release of China’s GDP data, which was revised lower for Q1. The outlook for China’s economic recovery is unclear, as Julian Evans-Pritchard, senior China economist at Capital Economics observes that ‘headwinds to growth are likely to intensify during the second half of the year.’
Another factor hindering the Australian Dollar’s progress was the spread of the coronavirus Delta variant. The state of Victoria was ordered into 5-day lockdown today following a spike in covid-19 infections.
Looking forwards, AUD is unlikely to stage a recovery in the near term. In the absence of any upcoming Australian data, the currency is likely to be driven by China’s economy, in addition to the covid situation.
Pound (GBP) Swings Up on Mixed British Data
The Pound (GBP) has seen an upturn against the Australian Dollar today as UK data published this morning printed higher-than-expected Average Earnings. Wages grew by 7.3% in May, ahead of estimations of 6.9%.
Analysts were quick to temper the good news with warnings that ‘pay growth rates are being distorted by the job losses among lower-paid workers.’ Market optimism persists though, as for the first time since the pandemic, payroll numbers are reaching above pre-pandemic levels in some regions: including the North East, North West, East Midlands and Northern Ireland.
Looking forwards, the Pound is likely to trade higher off the back of further good news from the Bank of England’s (BoE) Michael Saunders. Hawkishly, Saunders floated the possibility for an earlier rate hike during his speech this morning, confirming that the question of whether to curtail asset purchases would be discussed at forthcoming meetings.