Australian Dollar British Pound Exchange Rate Advances on Record Australia Trade Surplus
The Australian Dollar British Pound exchange rate surged on Thursday, quickly recovering from its previous dip, as the latest Australian trade surplus report impressed AUD investors. AUD GBP was able to advance from a weekly low of 0.59 to over 0.60.
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Australian Dollar (AUD) Surges after Domestic Trade Surplus Breaks Records
Demand for the Australian Dollar surged after Thursday’s Asian session as the day’s Australian trade balance results were highly impressive.
Projected to improve from A$1.24b to A$2.2b, the figure instead jumped from a revised A$2.04b to a record-breaking trade surplus of A$3.51b.
Thanks to this strong December trade surplus result, concerns of Australia falling into technical recession eased. Hopes also increased that Australia’s rating could be upgraded.
Following the result, as well as a profit-taking selloff in the US Dollar, the Australian Dollar surged across the board and easily weakened the Pound.
Pound (GBP) Sold from Wednesday Highs Ahead of Bank of England (BoE) Meeting
Sterling surged during Wednesday’s European session as the day’s manufacturing PMI revealed that factory input prices had surged at a record rate of 88.3 in January.
The overall impressive UK manufacturing PMI bolstered hopes that the UK economy would continue to grow even if the services sector was hit by a plunge in consumer spending.
However, as UK MPs voted overwhelmingly in favour of taking the Article 50 bill to its final voting stage on Wednesday night, the reality of the nearing Brexit process hit GBP trade.
Following this was Thursday’s highly anticipated Bank of England (BoE) meeting, at which the bank left UK interest rates frozen as predicted but slightly cut the country’s inflation outlook while updating the growth outlook.
As the bank forecast that stronger growth could be achieved despite lower inflation, market hopes that the BoE would move towards hiking interest rates in the mid-term future dropped and Sterling demand faded.
As a result, the Pound selloff was extended, allowing AUD GBP to easily surge.
Australian Dollar British Pound Forecast: Will Friday’s Data Prove Influential
This week’s key Australian ecostats have all been published now, leaving the ‘Aussie’ vulnerable to shifts in risk-sentiment and the Pound’s movements during Friday’s session.
GBP investors are likely to continue reacting to the Bank of England’s (BoE) ‘Super Thursday’ policy decision and press conference with BoE Governor Mark Carney through until the end of the week.
However, Friday’s session will see the publication of Britain’s January services and composite PMI prints from Markit which could also influence the Pound’s value, especially if services drop further than expected.
Services are Britain’s biggest economic sector and is projected to have slipped from 56.2 to 55.8 in January. Any lower than this and traders will grow concerned that UK consumer spending could plummet and cause UK growth to slow this year.
As always, increases in demand for ‘safe haven’ currencies like the US Dollar (USD) as well as falling commodity prices will weaken the Australian Dollar.
The biggest event ahead for AUD traders however is sure to be next Tuesday’s Reserve Bank of Australia (RBA) interest rate decision.