Pound Australian Dollar Exchange Rate: World Bank China Report Sends GBP/AUD Higher

April 7, 2014 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate: World Bank China Report Sends GBP/AUD Higher

Not for the first time a headline-grabbing pronouncement from the World Bank has caused major shifts in the global currency markets during this afternoon’s session. A report published by the widely-respected organisation earlier today saw the World Bank cut its 2014 GDP growth forecast for China to 7.6% - down 0.1% from its previous estimate of 7.7%.

The Pound Sterling to Australian Dollar exchange rate is trading up +0.43% at 1.79247 GBP/AUD. The Australian Dollar to Pound Sterling exchange rate is trading down -0.42% at 0.55789 AUD/GBP.

The slight trimming of projections regarding the level of economic activity in the world’s second largest economy may not appear to be a major event, but with economists asserting that the Chinese economy needs to grow by at least 7.0% in order to tread water in real terms thanks to the nation’s rapid population expansion and move towards increased consumerism, today’s report represents a significant step towards the danger zone.

The currency market has certainly viewed the development as such, with several major global currencies experiencing shifts in value on the day. Global equities markets have taken a pronounced hit following the news, with London’s FTSE 100 shedding over 1.0% of its value on the session. Frankfurt’s Dax lost closer to 2.00% on the day as investors priced-in a higher percentage chance of slower global growth rates for this year.

The usual suspects in the currency markets have lost ground as a consequence of the dip in risk appetite, with the Commodity Dollars in particular taking a hit. The Pound Australian Dollar exchange rate has edged higher since the New York open, touching the 1.7954 level GBP/AUD a short time ago. Meanwhile, the Pound New Zealand Dollar has also headed Northwards, tipping the scales at 1.9340 GBP/NZD just before the London equities close.
Elsewhere, the Pound US Dollar exchange rate has also moved higher on the day GBP/USD. The move for Cable looks to be a clear case of a delayed reaction from market participants to last Friday’s US employment numbers. The fact that joblessness in America’s economy stubbornly remained at 6.7% last month has been taken as a signal by investors that the Fed’s QE scheme may be here to stay for a while longer.

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