Home » GBP » Pound Sterling Australian Dollar (GBP AUD) Climbs as Chinese Inflation Misses its Mark

Pound Sterling Australian Dollar (GBP AUD) Climbs as Chinese Inflation Misses its Mark

Australian Dollar Currency Forecast
  • Pound Sterling Australian Dollar Hits 1.6540 – Australian Dollar Pound Sterling Slides to 0.6043
  • Chinese Year-on-Year Inflation Comes up Short – Australian Dollar Stumbles
  • Westpac Consumer Confidence Drops – Australian Dollar Drops with it

The Pound Sterling to Australian Dollar exchange rate continued in its climb this morning after some disappointing Australian and Chinese data releases.

China’s consumer price index rose 1.4% year-on-year in July, down from a 1.5% rise in June – the lowest inflation rate since April 2017.

The predominant causes for the slowdown were declining food prices, (particularly pork; a staple meat in the Chinese diet) which fell -1.1%, offsetting non-food inflation of 2.0%.

In slightly more positive news, however, the year-on-year Chinese producer price inflation figure remained stable for July at 5.5% – in line with expectations.

Ultimately China’s year-on-year inflation missing its mark was enough to cause demand for the ‘Aussie’ Dollar to dip in the early hours of this morning, as Australia’s economy is intimately tied to China’s immense appetite for iron ore.

Westpac Consumer Confidence Drops, Australian Dollar (AUD) Slumps with it

In Australian data, the month-on-month Westpac consumer confidence index for Australia dropped this morning from 96.6 to 95.5 after a 0.4% rise in July (a result below 100 is considered to demonstrate that there are more pessimistic consumers than optimistic ones).

This drop was the fourth consecutive drop in consumer confidence over the past months, with a great deal of anxiety arising regarding slow wage growth, high energy costs and the fear of an interest rate hike.

Westpac stated:

‘The survey detail suggests increased pressures on family finances, concerns around interest rates, and housing affordability in NSW and Victoria are more than outweighing increased confidence around jobs’.

The Australian Dollar, already reeling from the disappointing Chinese inflation figures, continued in its slump as a result, causing GBP AUD to climb ever higher.

UK Trade Data Looms – What can we expect for GBP AUD?

The Pound has, for the most part, managed to climb against the Australian Dollar today, despite Brexit anxieties continuing to rage and a lack of notable UK data releases. Whether this will continue, however, is up to debate.

Tomorrow will feature data releases on UK industrial production, manufacturing production, construction output and the highly anticipated UK trade balance – and the majority of these are currently forecast to print positively.

Notably, the UK’s trade deficit, is predicted to decrease from -£3073 to -£2500; a significant drop, should it occur, and one that would surely drive this pairing higher.

The data calendar for Australia tomorrow is predominantly quiet, so it may be that Sterling will find little opposition to its climb if UK data proves positive.