British Pound to Australian Dollar (GBP/AUD) Exchange Rate Bolstered by Construction Output
In spite of a mixed-bag of economic data publications pertaining to the UK the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has gained as a result of poor manufacturing data from Australia’s largest trading partner, China.
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Sterling struggled versus the majority of its major peers last week with a lack of British economic data publications.
A succession of dismal Eurozone domestic data publications went some way towards the Pound’s bearish behaviour given the intimate trade relationship between the UK and the Eurozone.
Scotland’s bid for independence was also a contributing factor to the soft Sterling. With the referendum debate producing more questions than answers; investors pulled away from the Pound in favour of less-risky currencies.
In contrast, the Australian Dollar was generally bullish last week having avoided the outstretched arms of the on-form US Dollar.
The Pound Sterling to Australian Dollar has hit a low today of 1.7757.
Monday’s Pound to ‘Aussie’ exchange rate has seen a reversal in fortune from that of last week despite a soft British manufacturing PMI.
The UK Manufacturing PMI was forecast to grow from the previous figure of 54.8 to 55.1, but the actual result was a disappointing declination to 52.5.
Whilst manufacturing data was less-than-desirable; the damage to Sterling was minimal as the manufacturing data was accompanied by more impressive domestic data results.
Mortgage Approvals exceeded the 66,000 forecast hitting 66,600, although this was still down from the previous figure of 67,100. Both Net Consumer Credit and Net Lending Sec. on Dwellings eclipsed forecast figures.
Sterling has also been bolstered by a recent statement from the Scottish Prime Minister Alex Salmond, who admitted that if Scotland wins the bid for independence they would have to inherit a portion of the British debt.
Monday’s Australian economic data has contributed to the softening of the ‘Aussie’. The AiG Performance of Manufacturing Index dropped from 50.7 to 47.3, moving from growth to contraction.
Perhaps the most influential data release in terms of the softening of the ‘Aussie’ is the Chinese Manufacturing PMI. The intimate trade relationship between China and Australia means that any negative manufacturing data from either economy is mutually detrimental.
The Chinese Manufacturing PMI was forecast to drop from 51.7 to 51.3, but the actual data revealed a declination to 51.1.
Those invested in the Australian Dollar will be hoping the weekly consumer confidence index due on Tuesday will emulate the previous weeks success.
The Australian Dollar has suffered losses across the board on Tuesday morning following the Reserve Bank of Australia’s interest rate decision. Having decided to maintain the current interest rate of 2.50%, the rate has now remained unchanged since 2006.
Reserve Bank of Australia Governor Glenn Stevens admitted in a statement this morning that the ‘Aussie’ (AUD) is very much overvalued, which is holding back the transition from mining to domestic economic growth.
The Pound has strengthened on Tuesday after Augusts’ construction output increased at the fastest pace in seven months. Having been forecast at 61.5 the actual result eclipsed expectations printing at 64.0.