GBP/AUD is slightly bullish in early trading on Thursday. However, the pair is still following one of its worst downtrends in years. Currently, one British pound buys 1.9019 Australian dollars, up 0.03% as of 7:35 AM UTC. Earlier today the pair fell below 1.9000 for the first time since January.
The Aussie started to rally after investors turned to riskier assets amid hopes that the coronavirus has become less aggressive. Several European countries are easing lockdown rules. Elsewhere, the pound is under pressure as the UK Prime Minister Boris Johnson considers the tough measures should be extended for a while.
The Australian dollar has experienced the best monthly performance in about four years. Since the start of April, it has gained over 6.3% against the sterling, 5.8% against the yen, and over 8% against the euro, which is the best such increase since 1993.
Nomura economist Andrew Ticehurst said:
“Our strategy team remains tactically long AUD/JPY and short GBP/AUD. Broader risk sentiment remains the largest driver of AUD’s fortunes.”
Nevertheless, on Thursday, the Aussie has slightly declined against a weakening pound after China released its manufacturing activity data.
China’s Manufacturing PMI Falls Short of Expectations
The Chinese government said that factories had experienced a collapse in export orders in April.
The National Bureau of Statistics said that the official purchasing managers’ index (PMI) had dropped to 50.8 from 52 in March. Investors expected a decline to 51.
The sub-index of export orders collapsed to 33.5 from 46.4 in March. Some factories even cancelled their orders after reopening.
Iris Pang, ING’s chief economist for Greater China, commented:
“It is still too early to conclude that the Chinese economy is growing again. The Western world has yet to relax some of its city lockdowns. And even after the lockdowns are relaxed, it is uncertain when demand will return to pre-Covid levels due to strict social distancing measures implemented domestically and in foreign economies.”
Businesses reopened their operations in China, but they still struggle to work at full capacity. A survey carried out by China Beige Book International (CBB) suggested that 91% of Chinese companies reopened activities, but over 40% of them cannot operate at more than half of capacity.
China is Australia’s largest trade partner and source of tourists.
