The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate advanced by around 0.60% during Tuesday’s European session.
After manufacturing data out of China bettered estimates, despite remaining in contraction territory, the Australian Dollar advanced versus many of its peers. Aiding the uptrend was a poor result from May’s US Durable goods Orders which caused many futures traders to speculate that the Federal Open Market Committee (FOMC) will delay a rate hike for some time to come.
The Pound, meanwhile, softened versus its major rivals after data out of the Confederation of British Industry printed poorly. This stoked a declination initiated by trader profit buying after last week’s surge opened up some attractive selling opportunities.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.4913.
Although China’s Manufacturing PMI remained in contraction territory in June, the fact that output declined less-than-expected supported demand for the Australian Dollar. The HSBC Manufacturing PMI was forecast to tick higher from 49.2 to 49.4, but the actual result reached 49.6.
Commenting on the Flash China Manufacturing PMI survey, Annabel Fiddes, Economist at Markit said: ‘The latest Flash China Manufacturing PMI survey provided a mixed bag of data in June. On the one hand, the sector shows signs of improvement as output stabilised amid a slight pickup in total new work, while purchasing activity also rose slightly over the month. On the other hand, manufacturers continued to cut their staff numbers, with the latest reduction the sharpest in over six years. This suggests that companies have relatively muted growth expectations as demand conditions both at home and abroad remain relatively subdued.’
As mentioned above, futures traders have delayed bets as to the timing of a Fed interest rate hike after a poor result from Durable Goods Orders eased pressure on the FOMC. Any delay to a Fed rate increase will see the ‘Aussie’ climb amid heightened demand for high-yielding assets.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate dropped to a low of 0.4872 today.
Last week, a succession of positive British ecostats caused the Pound to rally against its most traded currency competitors. The significant appreciation opened up some attractive selling positions as traders locked in profits. With an absence of significant domestic data to curb the trend, the Pound continues to decline.
Aiding the depreciation was disappointing domestic data results. CBI Trends total Orders declined in June from -5 to -7 despite predictions of a rise to 2. CBI trends Selling Prices also cooled in June from 2to -7. ‘Improving momentum in the Eurozone is being offset by the effect of the strengthening Pound on UK manufacturers’ overseas sales and margins,’ Rain Newton-Smith, CBI Director of Economics, said. On top of that, the ongoing Greek saga is causing uncertainty.
Given the absence of further domestic data publications to provoke changes, the Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is likely to hold gains for the remainder of Tuesday’s European session. Wednesday could see AUD/GBP volatility with both Australian and British economic data due for publication.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate climbed to a high of 0.4918.
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