Pound Dollar Exchange Rate Could Climb On Positive Chinese Export Data

Modified: Sunday, 11 November 2012 20:01 BST - Written by John Cameron

STORY LINK Pound Dollar Exchange Rate Could Climb On Positive Chinese Export Data

Investor focus during the weekend currency market shutdown fell upon the Far Eastern economy and in particular the region’s leading superpower – China. The recent trend of improving data from the world’s second largest economy continued with Saturday’s publication of domestic trade data for last month. Analysts’ expectations were for a slight increase in Chinese exports from an annualised 9.9% in September to 10.0%, so it came as a pleasant surprise when the figure showed at a healthy 11.6%. The hope now is that the concerning run of seven consecutive quarters of decreasing Chinese economic growth will come to an end when the state’s next GDP data is released.

China’s importance to the continuing prosperity of the global economy was underlined over the weekend when the Organisation for Economic Co-operation and Development published a report which predicted that emerging nations, and in particular China, will play an increasingly important role in global economic affairs. Startlingly, the paper predicted that economic activity in the combined economies of India and China will be greater than that of the remainder of the developed world combined within the next 50 years. More than ever before, the rest of the world is now dependent on a healthy Chinese economy.

Expect the encouraging weekend data from the Far East to cause an improvement for world stock indices in the early part of this week’s session. This uptick in global investor sentiment is likely to cause a softening of the safe-haven US Dollar which could make the GBP USD exchange rate’s excursion into the 1.5800s at the end of last week a brief one.

Highlights for the remainder of the week include tomorrow morning’s UK CPI inflation data for October. A reading below September’s 2.2% showing could re-ignite market babble regarding an increase in the UK’s £375bn Quantitative Easing this side of Christmas.

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