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Pound Australian Dollar (GBP/AUD) Exchange Rate Dips Despite Weakening Chinese Economic Data

June 16, 2021 - Written by John Cameron

GBP/AUD Exchange Rate Falls on Robust Outlook for Australian Economy

The Pound Australian Dollar (GBP/AUD) exchange rate dipped today despite demand for the risk-sensitive ‘Aussie’ being dented by underwhelming Chinese industrial and retail data. The pairing is currently fluctuating around AU$1.83.

With China being Australia’s largest trading partner, underwhelming Chinese domestic consumption in May has sparked concerns about the outlook for the Australian economy.

Iris Pang, the chief economist at ING Think, commented on the data:

‘Chip shortages are now an obvious problem for the automobile industry. We will closely monitor the impact of this on other industries, such as the production of smartphones and other consumer devices because sales of these items should pick up as US and Europe starts to recover from COVID-19 and the summer shopping spree is on the way.’

In Australian economic news, this morning saw the release of the latest Westpac leading index data for May, which fell by -0.06%, falling short of forecasts.

However, the latest Australia wage data rose by 2.5% at the beginning of the financial year beginning in July.

As a result, AUD investors are now more hopeful about the economy’s rebound from the Covid-19 pandemic later this year.

Pound (GBP) Dips as UK Inflation Exceeds Bank of England’s Target

The Pound dipped against the ‘Aussie’ today despite UK inflation jumping to 2.1% and exceeding the Bank of England’s (BoE) target for the first time in two years.

With inflation continuing to rise, this has stoked fears that the easing of lockdown measures could lead to an increased cost of living.

Jack Leslie, a senior economist at the Resolution Foundation thinktank, commented on the latest inflation gauge:

‘Inflation has risen sharply in recent months and will rise further as the impact of higher commodities prices feed through the supply chain. But UK inflationary pressures are different – and nowhere as near as large – as those causing fierce debate in the US.

‘Looking ahead, with the medium-term outlook for inflation in the UK still relatively benign, policymakers should look beyond today’s figures and worry far more about rising unemployment than rising inflation.’

However, Prime Minister Boris Johnson’s delay to June’s planned easing of lockdown measures has weighed on the GBP/AUD exchange rate today.

The Delta Covid variant is stoking fears of a possible third-wave disrupting the nation’s economic recovery later this year.

As a result, Sterling traders are becoming more hesitant as Covid-19 infection rates continue to climb throughout England.

GBP/AUD Exchange Rate Forecast: Could a Bullish RBA Boost the Pound?

Australian Dollar investors are looking ahead to tomorrow’s release of the latest Australian unemployment rate data for May.

If joblessness continues to fall in Australia, then we would see the ‘Aussie’ begin to creep higher against the Pound.

Reserve Bank of Australia (RBA) Governor Philip Lowe will also deliver a speech. If he is notably upbeat about the outlook for the Australian economy, then we could see the AUD/GBP exchange rate head higher.

Pound (GBP) investors will continue to monitor the UK’s Covid-19 situation this week, with any signs of rising case numbers or hospitalisations being GBP-negative.

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