Pound Australian Dollar Exchange Rate News: GBP/AUD Falls as Chinese PMI Services Prints Higher Than Forecast

February 7, 2022 - Written by John Cameron

STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Falls as Chinese PMI Services Prints Higher Than Forecast

GBP/AUD Stumbles as Chinese PMI Services Print Higher-Than-Expected

The Pound Australian Dollar (GBP/AUD) exchange rate is slipping today after China saw services PMI print marginally higher than forecast.

At the time of writing, the GBP/AUD exchange rate is trading at approximately AU$1.9066, approximately down by 0.3% from today’s opening levels.

Australian Dollar (AUD) Rises as Chinese PMI Data Overshoots Forecast

The Australian Dollar (AUD) is climbing against the Pound (GBP) this morning as China’s PMI services for January printed slightly above forecast.

Due to the close trading links between Australia and China, the better-than-expected data is bolstering AUD’s potential.

However, the figures also showed growth in in the Chinese service sector still slowed to a six-month low as a result of coronavirus-related restrictions.

Wang Zhe, senior economist at Caixin Insight Group, said:

‘In December and January, the resurgence of COVID-19 in several regions such as Xian and Beijing forced local governments to tighten epidemic control measures, which restricted production, transportation and sales of goods.

‘This year, policymakers should make stability their focus. They should priorit[s]e improvements to employment and optimi[s]e the structure of the economy.’

Further bolstering AUD’s potential is the reopening of the Chinese economy following the Lunar New Year, as well as a risk-on market mood which is helping the ‘Loonie’ to recover some of Friday’s losses.

In addition, the Australian Prime Minister has stated that ‘if you’re double-vaccinated, we look forward to welcoming you back’, as the Australian borders reopen to tourists for the first time since March 2020.

This is boosting AUD on hopes a rejuvenated tourism sector could provide a major boost to the Australian economy.

On the other hand, the final publication of Australia’s retail sales for December reported a 4.4% contraction of sales growth over the festive period, and is capping the Australian Dollar’s gains this morning.

Pound (GBP) Falls as UK Political Landscape Remains Unsettled

The Pound (GBP) is dropping against the Australian Dollar (USD) this morning amidst ongoing UK political jitters.

Sir Charles Walker, former 1992 Committee vice chair, believes it to be ‘inevitable’ Boris Johnson, will be removed as Prime Minister following the ‘partygate’ scandal and Sue Gray’s damning report update.

Sir John Curtice, British political scientist, said:

‘A high proportion of Tory voters believe he broke the rules and they don’t believe what he is saying – this is a real problem for him. The question becomes, what will they believe him on in future?

‘Political parties can recover from electoral trouble. But leaders rarely recover, once a leader becomes very unpopular. It’s very difficult to reverse.

‘So far, Boris Johnson is fighting a losing battle in persuading people that he did not break the rules … The art of rhetoric, at which he is brilliant, may not be sufficient to enable him to restore his reputation.’

The ongoing political uncertainty looks to remain a key source of weakness for the Pound in the coming days.

GBP/AUD Exchange Rate Forecast: Will Business Confidence Weigh on AUD?

Later this week, we may see Australian’s latest Business Confidence release buoy the Pound Australian Dollar (GBP/AUD) exchange rate.

January’s index is forecast to slip from -12 to -14, showing a further decline in business confidence and weighing on AUD’s appeal.

However, the consumer confidence index for February is predicted to marginally increase which may boost the ‘Aussie’.

Additionally, the reopening of the Australian border and a speech by the Reserve Bank of Australia’s Governor, Philip Lowe may also support the Australian Dollar.

On the other hand, Sterling is likely to be influenced by both a speech from Bank of England’s Governor, Andrew Bailey, as well as the ongoing UK political turbulence.

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TAGS: Pound Australian Dollar Forecasts