September 2, 2019 - Written by John Cameron
STORY LINK Pound (GBP) Falls against Australian Dollar (AUD) as UK Manufacturing Plummets to Seven Year Low
Pound Australian Dollar (GBP/AUD) Exchange Rate Slides as Manufacturing Hits Seven-Year Low
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slumped and is currently trading at an inter-bank rate of AU$1.7975.
On Monday, data from Markit revealed that UK manufacturing hit a seven-year low as uncertainty strangled the sector.
The UK manufacturing PMI slipped from 48 in July to 47.4 in August as new orders plummeted at the fastest pace in over seven years.
Added to this, the survey reported its lowest levels of business confidence since the measure was added to in July 2012.
Commenting on the data, Director at IHS Markit, Rob Dobson stated:
‘High levels of economic and political uncertainty alongside ongoing global trade tensions stifled the performance of UK manufacturers in August. Business conditions deteriorated to the greatest extent in seven years, as companies scaled back production in response to the steepest drop in new order intakes since mid-2012. Based on its historical relationship against official ONS data, the latest PMI Output Index is consistent with a quarterly pace of contraction close to 2%. The outlook also weakened as the multiple headwinds buffeting the sector saw business optimism slump to a series-record low.’
Australian Dollar (AUD) Rises despite US-China Tensions
The risk-sensitive Australian Dollar was left under pressure on Monday as the global economic outlook darkened.
On Sunday, Washington hit a variety of Chinese imports with 15% tariffs while China hit the US with new tariffs on US crude oil.
However, China is moving slowly in the implementation of its retaliatory tariffs against the US.
The proportion of tariffs that hit on Sunday account for around one-third of products, with the majority of duties expected to hit on 15 December.
Meanwhile, US President Donald Trump has said the US and China will meet for talks later this month, although hopes for a resolution have shrunk.
Pound (GBP) Under Pressure as MPs Warned Against Government
Meanwhile, UK Conservative MPs have been warned against rebelling against the government over Brexit.
A senior source has stated that MPs who voted to block a no-deal could ‘destroy’ the government’s negotiating position.
The anonymous source also noted that any rebels will have the whip withdrawn and be deselected.
Added to this, Sterling was left under pressure as minister Michael Gove refused to guarantee any legislation aimed at stopping a no-deal would be abided by.
Pound Australian Dollar Outlook: Will a Dovish RBA Weigh on AUD?
Looking ahead to Tuesday, the Australian Dollar (AUD) could slide against the Pound (GBP) following the release of July’s retail sales.
If Australian retail sales do not rise as high as expected, the ‘Aussie’ could slide.
Meanwhile, the Reserve Bank of Australia (RBA) is set to release its interest rate decision.
While the bank is expected to leave rates unchanged, if the RBA’s rate statement is overly dovish, the Pound Australian Dollar (GBP/AUD) exchange rate could rise.
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TAGS: Pound Australian Dollar Forecasts