The GBP AUD exchange rate was higher by 0.22% on Monday as sterling shook off earlier gains to remain in positive territory for a fifth-consecutive day. The price action climbed higher, but the pound could still be marking a bottom in the price for further gains.
The Australian dollar supported PMI figures in the Asian session, but the UK also delivered on that metric in the European session, with the sterling rebounded.
The GBP to AUD rate traded at 1.7458, looking to further data this week.
Australian PMI manufacturing numbers drop to 55.7
Australia’s manufacturing sector was still in expansion territory in July, although at a slower pace, according to S&P Global. Manufacturing PMI came in at 55.7 compared to 56.2 in June.
The 50 level separates expansion from contraction, and Europe’s key economies saw numbers below that in the European session.
The Australian data for July pointed to a sixth-straight month of expansion in production in the manufacturing sector. Respondents to the S&P Global survey said that overall demand was strong with additional shifts being worked.
Tomorrow is another big data for the Australian dollar with an RBA rate decision and home loans data. Economists at UOB Group see another 50bps hike from the central bank, saying that in respect of the RBA’s consistent efforts to ensure that inflation in the country returns to target gradually, they now think the RBA is open to a third 50bps increase this month. It will then look to another 25bps rise in autumn to take the OCR to 2.10 per cent by the end of the year.
The Reserve Bank moved aggressively to cool inflation after shrugging off the threat of higher prices. Home loans will likely show a sharp contraction of -4.25% as the interest rate rises start to filter through to homebuyers.
British manufacturing PMIs paint a similar picture
PMI data for UK manufacturers painted a similar picture as Australia, with the index still in expansion territory but declining.
British manufacturing output and new orders fell in July at the fastest rate since May 2020, as European customers struggled with rising costs and slowing demand.
European countries struggle with the economic climate. Chris Williamson of S&P Global said that manufacturing in the Eurozone sunk into a progressively steep downturn, increasing the risk of recession in the region. New orders fell at a substantial pace, excluding pandemic lockdown months, which is the most severe since the debt crisis in 2012, with more to come.
Thursday brings the Bank of England’s latest monetary policy meeting with a Reuters poll of economists anticipating a further 50bps move by the BoE. Over 70% of respondents now expect a 50bps increase, which jumped from 54% in a previous poll. That will be driven by the US Federal Reserve, which went for another vigorous rate hike last week.
The pound sterling edged higher from the lows against the Australian dollar, and the central bank meetings will define whether this is a sustainable low in sterling.
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The post GBP AUD: Sterling Trudges Higher Against the Aussie appeared first on Pound Sterling Forecast.
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