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Pound Australian Dollar (GBP/AUD) Exchange Rate Drops as Chinese GDP Benefits from Stimulus Programme

April 17, 2019 - Written by John Cameron

GBP/AUD Exchange Rate Falls as Chinese Industrial Production Improves

The Pound Australian Dollar (GBP/AUD) exchange rate fell today and is at the time of writing trading around AU$1.8158 on the inter-bank market.

The Australian Dollar (AUD) rose against the Pound (GBP) today following the publication of the Australian Westpac Leading Index figures for March, which increased to 0.2%.

However, Australia’s largest trading partner, China, benefited from encouraging economic data today, with the Chinese GDP figures for the first quarter rising above forecast to 6. 4%.

While Chinese industrial production figures for March also shot up to 8.5%, exceeding the 5.9% forecast.

Tai Hui at JP Morgan Asset Management commented that Beijing’s recent stimulus programme had ‘started to yield results’.

Hui added:

‘This confirms that China’s economic growth is bottoming out and this momentum is likely to continue.’

GBP/AUD Exchange Rate Sinks as UK Inflation Data Steadies

The Pound fell, meanwhile, following the publication of the UK inflation data for March, which held steady at 1.9%.

The Office for National Statistics identified the key reasons for the stasis, saying that motor fuels and clothing had increased the cost of living during March.

UK Retail Price Index figures for March, however, fell to 0.0% despite the 0.2% forecast, further dampening confidence in the economy.

In Brexit news meanwhile, the Labour leader Jeremy Corbyn has criticised cross-party talks with the Conservatives, saying that many Tory MPs simply wanted to do a deal with the US President Donald Trump.

Corbyn said:

‘The Government doesn’t appear to be shifting the red lines because they’ve got a big pressure in the Tory party that actually wants to turn this country into a deregulated low-tax society… I don’t want to do that.’

AUD/GBP Exchange Rate Rises on Rebounding Chinese Economy

Optimism surrounding US-China trade talks has bolstered confidence in the ‘Aussie’ today, and with China’s rebounding economy this has provided a benefit to Beijing in talks with the US.

Michael Hirson, a former US Treasury Department official, commented:

‘Now that China’s growth is recovering, Trump and team will be getting more questions from pundits and the media about whether his leverage is slipping away.’

The Australian Dollar has also benefited from increased risk-appetite, with many traders fleeing safe-havens like the Euro and the US Dollars for riskier assets.

GBP/AUD Forecast: Sterling Could Weaken on Further Brexit Uncertainty

Pound traders will be looking ahead to the publication of the UK retail sales figures for March tomorrow, which are expected to decrease.

These will be followed by the yearly retail sales figures excluding fuel for March.

However, Brexit will still remain in focus for many Pound investors tomorrow, with no other notable UK data.

‘Aussie’ investors will be looking ahead to the Australian unemployment rate figures for March tomorrow.

These will be followed by the Australian employment change figures.

The GBP/AUD exchange rate could potentially fall further if cross-party talks between Labour and the Conservatives break down, for this would heighten Brexit uncertainty and weaken the Pound.

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