Investors were keen to find out the results from the UK manufacturing data which was released just yesterday. The data was to be an important figure as the New Year arrived and had the potential to send the GBP upwards in the GBP/AUD exchange rate. However, the result showed a slight upward revision of the finalised UK manufacturing PMI, but this was not enough to prevent the GBP from spiralling to its second weakest level since 2012. Meanwhile, the AUD has found further support from the US-China trade deal, despite weak Chinese economic data sinking the AUD slightly and their own domestic data not doing much to support the currency either.
Poor UK Manufacturing PMI Sees GBP Slump Against AUD
The GBP lost footing against the Aussie Dollar yesterday as the UK’s manufacturing PMI was released. The slight upward revision of the finalised PMI was not enough to prevent the GBP from hitting its second weakest level since 2012. The index came in at 47.5 which was well into contraction territory in December. The confidence in the outlook of the UK economy has remained still as fears of ongoing weakness escalated. Economists are suggesting that investors are worried as the index showed the largest slump since 2012 and shows little signs of immediate recovery. Even with the manufacturing sector only covering a minor percentage of the UK’s economic activity, the weakness will see the GBP sink.
US-China Trade Deal Boosts Australian Dollar Despite Weak Economic Data
The Aussie Dollar found more support from the US-China trade deal yesterday as the US set its official data for the ‘phase one’ deal to be signed with China. The optimism surrounding the deal allowed the AUD to gain as optimism for global trade growth also increased. However, the AUD did not find any support from their own economic data. The December manufacturing data showed that the index had slipped further into contraction which limited the AUD. Added to this, the Chinese manufacturing PMIs also fell which didn’t help the AUD as it is heavily linked through trade with the Chinese economy.
Investors in the GBP will look towards today’s release of November’s consumer credit and mortgage approvals figures. For the AUD, the Australian services PMI is due shortly, of which economists are predicting a deterioration in the indices.
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