Pound Australian Dollar (GBP/AUD) Exchange Rate Muted as UK GDP Disappoints
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of AU$1.8218.
On Monday, data revealed that UK monthly GDP growth contracted by 0.4% in April which dampened sentiment in Sterling.
This was the largest fall in monthly GDP since December 2018, and the second consecutive month of contraction.
Meanwhile, further data revealed that in the three months to April the economy expanded by 0.3%.
Commenting on the data, Head of GDP at the Office for National Statistics (ONS), Rob Kent-Smith said:
‘GDP growth showed some weakening across the latest three months, with the economy shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure data leading to planned shutdowns.
‘There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK’s original EU departure date has faded.’
Australian Dollar (AUD) Falls as Chinese Imports Slump
Disappointing data from China likely dampened sentiment in the Australian Dollar leaving it muted against GBP following disappointing GDP data.
In May, China’s exports unexpectedly rose despite higher US tariffs.
However, imports slumped by -2.5%, the most in nearly three years and another sign of weak domestic demand.
Some analysts believe Chinese exporters may have rushed shipments to the US to avoid the newest round of tariffs.
This likely dampened sentiment in the risk-sensitive Australian Dollar (AUD).
Meanwhile, over the weekend US Treasury Secretary Steven Mnuchin said President Trump will decide whether to hit China with additional tariffs after a meeting with Chinese premier Xi Jinping later this month in Japan.
‘If China wants to move forward with the deal, we’re prepared to move forward on the terms we’ve done. If China doesn’t want to move forward, then President Trump is perfectly happy to move forward with tariffs to re-balance the relationship.’
Pound Australian Dollar Outlook: Will Higher than Forecast UK Average Earnings Buoy GBP?
Looking ahead to the start of Tuesday’s session, the Australian Dollar (AUD) could rise against the Pound (GBP) following the release of the National Australia Bank’s (NAB) business confidence.
If business confidence rises higher than forecast in May, it could buoy the ‘Aussie’.
Meanwhile, Sterling could edge up following the release of April’s UK average earnings.
If UK average earnings rise higher than expected it could cause the Pound Australian Dollar (GBP/AUD) exchange rate to rise.