After recovering much of the losses incurred following the release of disappointing UK Manufacturing and Industrial Production data, the Pound to Australian Dollar (GBP/AUD) exchange rate began the local session only slightly weaker.
Sterling was just 0.1% lower than Tuesday’s close against the ‘Aussie’, trending in the region of 1.8196.
Overnight the Australian Dollar was moderately supported by the news that the level of consumer sentiment in Australia increased in July.
The Westpac Consumer Confidence Index rallied from 93.2 in June to 94.9 this month (an increase of 1.9%).
While this was an improvement, and indicates that consumers are beginning to regain the confidence lost by May’s Federal Budget, the increase wasn’t as strong as industry experts had hoped for.
The report stated; ‘Confidence in the labour market remains stubbornly weak. The Unemployment Expectations Index registered a modest fall of 0.3% – lower reads indicate reduced concern around the labour market. The index has held within a narrow range all year and although it is 5% below its March peak, it remains 6% above the average for 2013. Despite a marked improvement in jobs growth since the start of the year and ongoing low interest rates, confidence in the labour market remains weak and fragile.’
The Pound to Australian Dollar continued trading in a softer position after this data was published, although the appeal of the ‘Aussie’ was slightly influenced by news from China (Australia’s main trading partner).
The data showed that Producer Price Inflation in China declined by the least for over two years in June. This result adds to the brightening picture of China’s economic outlook and is further evidence of the fact that the stimulus measures imposed by the government are having the desired effect.
Producer Price Inflation fell by -1.1% in June, year-on-year, slightly more than the -1.0% drop anticipated.
Meanwhile, the nation’s Consumer Price Inflation climbed by 2.3% in June, year-on-year, down from an annual gain of 2.5% in May.
The AUD/USD pairing consolidated recent advances during the North American session as one Federal Reserve official intimated that US inflation could run below target levels for some time and another adopted a less optimistic attitude regarding the growth prospects for the US.
Slightly disappointing UK house price and shop price reports also contributed to the ongoing Pound to Australian Dollar (GBP/AUD) exchange rate weakness.
Tomorrow’s Chinese data could impact the ‘Aussie’ tomorrow, but movement in the GBP/AUD exchange rate is more likely to be driven by the Bank of England’s interest rate decision.
UPDATED 08:45 GMT 10 July, 2014
GBP/AUD Climbs During Australasian Session
Prior to the Bank of England’s interest rate decision the Pound to Australian Dollar (GBP/AUD) exchange rate was up 0.4%.
The Australian Dollar came under pressure during local trading as employment data revealed that the Australian Unemployment Rate climbed from a revise 5.9% in May to 6% in June.
The news that the level of both Chinese imports and exports failed to increase by as much as anticipated also took a toll on the South Pacific currency.
AUD/USD declines lasted into the European session and the Pound to Australian Dollar (GBP/AUD) exchange rate is likely to remain in a stronger position unless the Bank of England delivers a surprising rate decision.
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, 0.9402,
Australian Dollar,,Euro, 0.6906,
Australian Dollar,,Pound, 0.5494,
Australian Dollar,,New Zealand Dollar, 1.0679,
US Dollar,,Australian Dollar, 1.0636,
Euro,,Australian Dollar, 1.4475,
Pound Sterling,,Australian Dollar, 1.8194,
New Zealand Dollar,,Australian Dollar, 0.9363,
[/table]
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