GBP/AUD Exchange Rate Steadies as Chinese Manufacturing Deteriorates
The Pound Australian Dollar (GBP/AUD) exchange rate is held steady today and is currently trading around AU$1.8629 on the inter-bank market.
The Australian Dollar (AUD) stabilised against the Pound (GBP) today despite the Chinese manufacturing sector showing its fasted deterioration in nearly three years in February. This was followed by China’s NBS manufacturing figures contracted further still to 49.2.
These were followed by the Chinese non-manufacturing figures for February which also fell to a worse-than-expected 54.3.
China is Australia’s largest trading partner, and with any signs of a slowing economy this weakens the value of the ‘Aussie’. This has also been compounded by a lack of consensus emerging from US-China trade talks this week.
Iris Pang, a Greater China Economist at ING, gave AUD traders further reasons for further caution, saying:
‘Unless the trade war truly turns into an extended truce, the weakening trend may not end quickly… As such we expect March’s PMI to fall, too.’
AUD traders, however, will be awaiting the release of the Australian AiG performance of management index figures for February later on today, and with any signs of an increase this could provide some uplift for the ‘Aussie’.
The Pound, meanwhile, benefited from the release of the UK GfK consumer confidence figures for February today, which recovered above expectation to -13.
Joe Staton, a Client Strategy Director at GFK, remained optimistic, saying:
‘Consumers are like markets, they respond to certainty and that’s in short supply just now… But it is frankly amazing that confidence is so stoic and stable in a world of sharp political instability and fear of the unknown.’
GBP/AUD Exchange Rate Rangebound as Traders Await Next Brexit Steps
Sterling has lost some of its gains today despite the recent breaking of the Brexit deadlock, with traders now focusing on a series of ‘next steps’ that Prime Minister Theresa May must take to secure to bolster support for her withdrawal deal ahead of the 12 March vote.
Yesterday, meanwhile, saw the House of Commons vote on various amendments, and with Labour MP Yvette Cooper’s amendment passing by a large margin a second-referendum, as well as a reduced likelihood of a no-deal, has buoyed confidence in the Pound.
Labour leader Jeremy Corbyn also supported a second-referendum.
Owen Smith, a Former Shadow Cabinet Minister, commented:
‘Now that Labour’s version of Brexit has been rejected by Parliament, I expect Jeremy Corbyn to throw his full weight behind campaigning for a public vote.’
GBP/AUD Forecast: ‘Aussie’ Could Weaken if Home Sales Fall
Australian Dollar traders will be looking ahead to the publication of the Australian HIA new home sales figures tomorrow, and with any signs of a further increase this could potentially weaken the AUD/GBP exchange rate.
Tomorrow will also see the printing of the Chinese Caixin manufacturing PMI figures, and if these follow today’s negative trend this could further negatively impact the ‘Aussie’.
Pound traders, meanwhile, will be looking ahead to tomorrow’s release of the UK market manufacturing PMI figures for February, which are expected to decrease.