Chinese Manufacturing Data Disappoints ? Pound Sterling Forecast Higher vs AUD NZD CAD

November 2, 2015 - Written by Frank Davies

STORY LINK Chinese Manufacturing Data Disappoints ? Pound Sterling Forecast Higher vs AUD NZD CAD

Soft Chinese Data weighs on Commodity Currencies, GBP/AUD Exchange Rate at 2.16.

The major risk event over the weekend came from China, with the publication of more disappointing data from the world’s second largest economy.

China’s growth of recent decades had been driven by a massive expansion of the East Asian nation’s manufacturing base, so any economic statistics from this sector are always closely-monitored by market watchers.

The latest Purchasing Managers Index survey of China’s manufacturing sector, which showed that for the third month on the trot factory output had contracted, was considered highly significant by analysts.

The result of 49.8 for October pointed to only a very slight contraction, but the comments from China’s National Bureau of Statistics which accompanied the publication hinted at real concerns about a potential ‘hard landing’ for the Asian powerhouse economy.

Zhao Qinghe of the Bureau observed that, ‘because of the recent weak recovery in the global economy and downward pressure in the domestic economy, manufacturers still face a severe import and export situation.’

BNP Paribas Predict China's 5-Year Plan will Reiterate Structural Reform, GBP/NZD Conversion Rate Trending around 2.28.

The data from China came at the end of an important week; the nation’s ruling Communist Party held its fifth plenary session last week where policymakers formulated China’s 13th 5 Year Plan.

Details of decisions taken and forecasts made at the plenum will not be made public until March 2016; when the ‘official line’ is published, it is probable that they it be generic.

Caroline Yu Maurer of BNP Paribas explained over the weekend that, ‘there are unlikely to be any specific targets announced, as the plenum is meant to set policy directions, not implementation targets.

They are likely to reiterate the structural reform measures and directions that have been announced before, to reinforce their commitment to structural rebalancing.’

China's 2016 GDP Predicted to Miss Targets, GBP/CAD Exchange Rate Trending Around 2.02

However, most analysts believe that the plenum will yield a reduction to China’s 2016 GP growth target from its current level of 7.0% to a band ranging from 6.0% to 7.0%.

Such an outcome is forecast to hurt the Commodity Dollars against the Pound Sterling, sending the GBP AUD, GBP NZD and GBP CAD exchange rates higher in the medium term.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Sterling Forecasts