Pound Sterling Records Gains against Australian Dollar (GBP/AUD) on Rate Speculation, Chinese Data Impacts ?Aussie?

March 9, 2015 - Written by James Fuller

STORY LINK Pound Sterling Records Gains against Australian Dollar (GBP/AUD) on Rate Speculation, Chinese Data Impacts ?Aussie?

The Pound climbed against the Australian Dollar exchange rate on Monday as investors priced in the possibility of UK rate hikes. Meanwhile, the AUD was offered some strength when Chinese figures printed favourably.

China’s Trade Balance rose from $60.03B to $60.62B in February as exports enjoyed a sharp rise. The February figure saw a massive 48.3% jump in exported goods on the year after January’s -3.2% decline. Any Chinese data is extremely favourable for Australia as China is the Oceanic region’s largest trading partner. Economist Yao Wei commented: ‘Chinese exports are humming along, which is a relief as the domestic investment momentum is struggling.’ The data comes shortly after the Chinese central bank cut its interest rates yet again in the hope of spurring economic growth.

The Australian Dollar has previously sunk on weaker Chinese figures as expectations for lessening import demand surfaced. The price of iron ore took a near 50% tumble last year as Chinese growth slowed—an event that pressured the ‘Aussie’ lower. However, Monday’s session may see further Australian Dollar movement with Weekly Consumer Confidence stats due to emerge. Monday also saw Australian Job Advertisements rise by 0.9% in February pulling the annual figure up to a healthy +10.0% increase on the previous year.

Economist Warren Hogan commented: ‘Growth in new labour demand appears to be occurring in tandem with job losses in certain sectors such as manufacturing and mining. As such, aggregate employment outcomes continue to fall short of population growth, with the unemployment rate edging up. We expect this process to continue through much of this year, in line with sub-trend economic growth outcomes.’

Meanwhile, the Pound enjoyed support from renewed hopes of a UK rate rise. While the Bank of England isn’t expected to make any adjustments to bank rate before the May general election, the central bank could very well make a move afterwards as political uncertainty ebbs away. Industry expert James Knightly commented: ‘An uncertain outlook for policy would weigh on sentiment and activity. If the election passes without too much disruption we suspect that the UK economy will be in very good shape. We still think the BOE could raise rates in November.’ Tuesday is scheduled to be another quiet day for UK domestic data with only BRC Like-For-Like Sales released. However, central bankers are expected to speak over the next several days and could be an event to offer the Pound some movement.

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