Positive Chinese Data Sends Pound Dollar Exchange Rate Higher Today

Modified: Monday, 3 December 2012 15:04 BST - Written by Toni Johnson

STORY LINK Positive Chinese Data Sends Pound Dollar Exchange Rate Higher Today

Last night’s Asian session brought the release of another set of encouraging data from the world’s second largest economy. The Chinese HSBC Manufacturing PMI survey for last month showed at 50.5, significantly up from October’s reading of 49.5. The print of above 50 indicates that activity in China’s vast manufacturing sector had returned to growth. It was the highest level for the survey since the Autumn of 2011. Analysts attributed the pick up in this key sector of Asia’s leading economy to a raft of government initiatives which have helped fill excess capacity which was caused by a cooling of China’s economy during the first three quarters of this year.

The positive news from China has seen global stocks make moderate gains over the past 24hrs, in spite of the ongoing ‘Fiscal Cliff’ standoff between Democrat and Republican policymakers in the US. The prevailing ‘risk-on’ trading environment has seen the GBP USD exchange rate edge up towards the 1.6100 level.

Elsewhere, the GBP EUR exchange rate has tested lower in the early part of today’s European session, touching 1.2294 this morning. Sentiment towards the single currency has firmed following the news that debt-burdened Greece is to begin re-purchasing some of its own government-issued bonds later this week. The move, which was part of Greece’s agreement with the EU/ECB/IMF ‘troika’ which saw her secure its latest tranche of bailout funding last week, has further improved investors’ willingness to hold euro-denominated assets. Greece is set to pay a massively reduced price for the gilts, many of which will be purchased form institutional investors at a discount of over 60%.

Highlight’s for the upcoming Asian session include the Reserve Bank of Australia’s latest policy decision. With a trimming of domestic interest rates to 3.00% anticipated, the ‘Aussie’ could come under renewed selling pressure tomorrow. Tonight also sees the release of the latest Australian Current Account Balance data – analysts will be looking for an indication that Australia’s trade gap is narrowing. Such an outcome would provide further evidence that the cooling in economic activity in Asia over the past 6 months is coming to an end.

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