Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Makes Gains as Businesses Grow More ‘Optimistic’
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate rose by around 0.3% on Friday morning. This left the pairing trading at around AU$1.7991.
The Pound made gains against the ‘Aussie’ today after the latest flash PMI data showed both the services and manufacturing sectors returned to growth.
Output growth hit a five-year high as the economy was able to reopen in July. Separately, the services PMI hit a 60-month high of 56.6 and the manufacturing PMI jumped to 53.6. This was the highest level since March 2019.
Commenting on the PMI surveys, Chief Business Economist at IHS Markit, Chris Williamson said:
‘The UK economy started the third quarter on a strong footing as business continued to reopen doors after the COVID-19 lockdown. The surge in business activity in July will fuel expectations that the economy will return to growth in the third quarter after having suffered the sharpest contraction in modern history during the second quarter.
‘However, while the recession looks to have been brief, the scars are likely to be deep. Even with the July rebound there’s a long way to go before the output lost to the pandemic is regained and, while businesses grew more optimistic about the year ahead, a V-shaped recovery is by no means assured.’
Australian Dollar (AUD) Falls as China Retaliates
Meanwhile, flash PMI data from Australia showed the manufacturing sector returned to growth in July.
Australia’s PMI composite jumped firmly into growth territory, although this did little to boost AUD against the Pound.
Trader attention turned back to deteriorating US-China trade relations after Beijing retaliated against Washington’s demand to close its consulate in Texas.
In a tit-for-tat escalation, China has ordered the closure of a US consulate in the south-western city of Chengdu.
This move followed a speech from US Secretary of State, Mike Pompeo, who noted Washington’s decision was due to China ‘stealing’ intellectual property.
Tensions deteriorated further after Pompeo’s speech on Thursday as his tone hardened and he noted:
‘Today, China is increasingly authoritarian at home, and more aggressive in its hostility to freedom everywhere else.
‘The free world must triumph over this new tyranny.’
Pound Australian Dollar Outlook: Will AUD Slump on Dovish RBA Speech?
Looking ahead to Monday, the Australian Dollar (AUD) could continue to slide against the Pound (GBP) following a speech.
The Reserve Bank of Australia’s (RBA) Assistant Governor, Christopher Kent is due to give a speech. If his tone is overly dovish it will weigh on ‘Aussie’ sentiment.
Meanwhile, AUD could slump further this week if risk appetite continues to decline as US-China relations deteriorate further.
If risk appetite continues to suffer as Washington and Beijing continue to retaliate, it will send the Pound Australian Dollar (GBP/AUD) exchange rate higher.
Comments are closed.