Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Rallies as UK Q1 GDP Upwardly Revised

September 30, 2019 - Written by John Cameron

STORY LINK Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Rallies as UK Q1 GDP Upwardly Revised

Pound Australian Dollar (GBP/AUD) Exchange Rate Rises as UK Economy not as Fragile as First Thought

The Pound Sterling Australian Dollar (GBP/AUD) exchange rate edged up and the pairing is currently trading around AU$1.8225.

The Pound edged up against the ‘Aussie’ as the Office for National Statistics (ONS) revealed the UK economy expanded by 0.6% in the first quarter and annual Q2 growth increased from 1.2% to 1.3%.

The upwardly revised data revealed the country’s financial health was not as fragile as once thought, buoying Sterling.

The data from the ONS confirmed that both increased household and government spending were among the few things that drove growth in the second quarter.

However, in the second quarter the UK economy shrank by -0.2% as the effects of Brexit stockpiling wore off.

Commenting on this morning’s data, ONS head of GDP Rob Kent-Smith noted:

‘Headline GDP remained unrevised in the latest quarter with the economy contracting, partly due to a fallback in manufacturing following the UK’s originally planned EU departure date.

‘Improved data sources and new methods mean our estimates now show households have been lenders in recent quarters. People have been donating less to charity than previously thought as well as receiving more money from renting out homes.’

Australian Dollar (AUD) Under Pressure Ahead of RBA Rate Decision

The Australian Dollar remained under pressure ahead of tomorrow’s Reserve Bank of Australia (RBA) interest rate decision.

Many are expecting the bank to slash rates once again, bringing the interest rate down to 0.75%, a new record low.

RBA Governor Philip Lowe has noted that the bank will continue to cut rates to get the economy growing at a fast enough rate to cause the unemployment rate to fall to at least 4.5%.

With Australian unemployment slowing increasing every month for the past six months, it seems likely the bank will cut rates for the third time this year.

However, some investors believe the bank will leave rates, and commenting on this, Morgan Stanley equity strategist, Chris Nicol noted:

‘Investors continue to wait for the next phase in trade developments and whether it will be another inflection point in the direction of travel for global growth.

‘We expect the RBA to leave rates on hold at their October meeting.

‘While it is a close call, we think that the RBA will choose to wait for more data before cutting rates further, and don’t see either the recent labour market print or RBA commentary as signalling an imminent easing.’

Pound Australian Dollar Outlook: Will a Dovish RBA Weigh on AUD?

The Australian Dollar (AUD) is likely to slide against Sterling (GBP) on Tuesday following the release of the Reserve Bank of Australia’s (RBA) interest rate decision.

The ‘Aussie’ is likely to be left under pressure as the bank is expected to slash rates to 0.75%.

Meanwhile, the Pound could slide later in the day, leaving the pairing muted.

If the UK manufacturing PMI slumps further in September it is likely to leave the Pound Sterling Australian Dollar (GBP/AUD) exchange rate flat.

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TAGS: Pound Australian Dollar Forecasts