During Australasian trading the GBP to AUD exchange rate shed recent gains and dropped from a high of 1.8337.
Yesterday the Pound posted widespread gains in response to an extremely strong surge in domestic retail sales and slightly hawkish minutes from the Bank of England’s latest policy meeting.
While the minutes showed that all nine members of the Monetary Policy Committee voted in favour of leaving interest rates unchanged, they hinted that policymakers were approaching a crossroads when it comes to the timeline for rate hikes.
The UK reports pushed the Pound to fresh highs against several of its rivals but the currency pared gains against the Australian Dollar during the local session.
After languishing as a result of disappointing domestic news, the ‘Aussie’ was able to stage a rebound in response to an unexpectedly upbeat manufacturing report from China – Australia’s main trading partner.
Economists had forecast that the HSBC/Markit manufacturing gauge would come in at 48.3 in May, up slightly from the 48.1 recorded in April but still below the 50 mark separating growth from contraction.
However, the index actually rallied to 49.7, alleviating fears of a slowdown in the global economy and boosting higher-risk/commodity-driven currencies.
HSBC economist Hongbin Qu said this of the report; ‘The HSBC Flash China Manufacturing PMI rebounded sharply to 49.7 in May, up from 48.1 in April. The improvement was broad-based with both new orders and new export orders back in expansionary territory. Disinflationary pressures also eased over the month and output prices increased for the first time since November 2013.’
It wasn’t all good news though, and Hongbin Qu did add; ‘the employment index fell further to 47.3, which implies that this month’s uptick in sentiment has not yet filtered through to the labour market.’
After the Chinese data was published the Australian Dollar strengthened against the Pound, Euro and US Dollar.
Additional Pound to Australian Dollar movement occurred on Thursday following the release of UK first quarter growth data.
As the report confirmed that the UK economy expanded by 0.8 per cent in the first three months of the year further GBP/AUD movement may be restrained. That being said, UK exports and imports did decline unexpectedly.
Before the weekend further volatility in the GBP/AUD pairing could be occasioned by China’s conference board leading index.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar, 0.9259,
Australian Dollar,,Euro, 0.6768,
Australian Dollar,,Pound, 0.5475,
Australian Dollar,,New Zealand Dollar, 1.0801,
US Dollar,,Australian Dollar, 1.0800,
Euro,,Australian Dollar, 1.4776,
Pound Sterling,,Australian Dollar, 1.8245,
New Zealand Dollar,,Australian Dollar, 0.9259,
[/table]
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