On Wednesday the AUD/GBP exchange rate rallied in response to a pessimistic batch of meeting minutes from the Bank of England.
Although the minutes did show a 7:2 split among the Monetary Policy Committee on the subject of interest rates, they also outlined headwinds facing the UK economy – including the slowdown in the Eurozone and a lack of domestic inflationary pressure.
Overnight the Australian Dollar was able to consolidate its advance as the National Australia Bank’s Business Confidence report showed that sentiment didn’t worsen in the third quarter.
China’s HSBC Manufacturing PMI also lent the ‘Aussie’ support, coming in at 50.4 instead of the 50.2 forecast.
During the European session the AUD/GBP exchange rate benefited from an unexpected decline in UK retail sales.
Sales excluding autos were expected to have stagnated on the month in September, but were instead shown to have fallen -0.3%.
On the year sales climbed by 3.1% – considerably less than the annual gain of 4.4% recorded in August.
According to the Office for National Statistics; ‘Textile, clothing and footwear sales provided the greatest source of downwards pressure, decreasing by 7.8% compared with August 2014, and by 4.1% compared with September 2013. Feedback from retailers suggested the fall was a result of unseasonably warm weather meaning consumers have delayed purchases of autumn and winter clothing.’
They added; ‘In September 2014, the amount spent in the retail industry decreased by 0.6% compared with August 2014. However, it increased by 1.3% compared with September 2013. Non-seasonally adjusted data show that the average weekly spend in the retail industry in September 2014 was £6.9 billion compared with £6.8 billion in September 2013 and £6.9 billion in August 2014.’
Before the weekend a final flurry of AUD/GBP exchange rate movement could be caused by the UK’s 3Q Gross Domestic Product data.
The UK economy is expected to have grown by 0.7% in the third quarter of the year, down from expansion of 0.9% in the second quarter. If this proves to be the case, the Australian Dollar to Pound Sterling exchange rate could close out the week trading in a stronger position.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5435.
The Australian Dollar to Euro exchange rate closed out the local session trending higher as the ‘Aussie’ was bolstered by the National Australia Bank’s Business Confidence report and China’s HSBC Manufacturing PMI.
The NAB figures showed that sentiment was unchanged in the third quarter of the year from the second. In a statement published with the figures it was said; ‘our monthly survey shows that the momentum has turned, with confidence easing steadily over the quarter. Similarly, conditions were up marginally in the quarter due to a surprisingly strong July result, but eased over the following two months. There was a slight lift in 12 month expectations.’
The AUD/EUR exchange rate fluctuated a little during the European session as investors reacted to a mixed bag of economic reports from the Eurozone.
Markit Manufacturing/Services and Composite PMI’s for France were shown to have fallen further into contraction territory than anticipated in October, with all three gauges dropping to fresh lows.
However, the situation in Germany proved to be better-than-feared. The manufacturing sector of the Eurozone’s largest economy outperformed expectations, with the index rising from 49.9 to 51.8 and pushing back above the 50 mark separating growth from contraction.
The Euro steadily clawed back losses against the Australian Dollar after the report was released, but further AUD/EUR volatility could be occasioned by the Eurozone’s Consumer Confidence Index – due out at 15:00 GMT.
The Australian Dollar to Euro (AUD/EUR) exchange rate is currently trending in the region of 0.6866.
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