June 28, 2019 - Written by John Cameron
STORY LINK Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Flat as UK GDP Reveals Weakening of UK Economy
Pound Australian Dollar (GBP/AUD) Exchange Rate Muted as Q1 UK GDP Rises
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained muted and the pairing is currently trading at an inter-bank rate of AU$1.8084.
On Friday, data revealed that UK GDP grew at a rate of 0.5% in the first three months of 2019.
Year-on-year, the Office for National Statistics (ONS) showed the UK economy grew by 1.8%, the fastest rate since Q3 2017.
Commenting on the data, Rob Kent-Smith of the ONS said:
‘GDP grew solidly and was unrevised in the first quarter of 2019, with manufacturing seeing strong growth due to orders being brought forward ahead of the UK’s original EU departure date.
‘Household saving has been historically low for 18 months, following a marked drop off in non-pension saving in recent years.’
However, the pairing was left muted as estimates for recent months have shown there has been a notable weakening of the UK economy.
April’s GDP slumped by -0.4%, the weakest monthly figure since March 2016.
Australian Dollar (AUD) Flat Ahead of Trump-Xi Meeting
The Australian Dollar remained muted against Sterling on Friday ahead of Saturday’s meeting between US President Donald Trump and Chinese Leader Xi Jinping.
The highly anticipated meeting is expected to cool trade tensions between Washington and Beijing.
Markets have been clinging on the hopes of progress between the two leaders, and Masayuki Kichikawa, Chief Macro Strategist at Sumitomo Mitsui Asset Management Co. stated:
‘The minimum to keep markets where they’re at now is for the United States and China to agree to keep talking and buy some time.
‘Markets are doubtful the leaders of [the United States and China] can reach a full agreement.’
Meanwhile, on Thursday risk appetite rose as the South China Morning Post said the US and China were laying out an agreement to avoid further tariffs.
Trump had previously threatened a further $300 billion worth of tariffs on Chinese imports.
However, at the start of the G20 summit Chinese Leader Xi Jinping warned against protectionism which likely weighed on the ‘Aussie’. Xi stated:
‘All thus us destroying the global trade order […] This also impacts common interests of our countries, overshadows the peace and stability world wide.’
Pound Australian Dollar Outlook: Will Successful US-China Trade Talks Buoy AUD?
Looking ahead to this weekend, the Australian Dollar (AUD) could rise against the Pound (GBP) following Saturday’s meeting between US President Donald Trump and Chinese Leader Xi Jinping.
Risk appetite could rise if reports suggest that the talks were successful, and Washington and Beijing are to continue their trade talks.
Meanwhile, on Monday the Pound could rise following the release of the UK Markit manufacturing PMI.
If June’s PMI rises higher than forecast, it could cause the Pound Australian Dollar (GBP/AUD) exchange rate to rise.
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TAGS: Pound Australian Dollar Forecasts