- Pound (GBP) gives up gains after service sector downward revision and as outlook sours
- BoE Andrew Bailey to speak later
- Australian trade surplus misses forecasts at AUD4.6 billion as Chinese political tension s start to show in the figures
- Australian retail sales due later, 3.3% mom increase forecast
The Pound Australian Dollar (GBP/AUD) exchange rate is holding onto gains for a fourth straight session on Thursday, but only just. The pair settled in the previous session +0.2% at 1.8187. At 08:15 UTC, GBP/AUD trades +0.05% at 1.8194 as it slips back from highs of 1.8220 earlier in the session.
The Pound is giving up earlier gains versus the Australian Dollar after service sector data misses estimate. The final PMI reading was revised lower to 58.8 in August, down from 60.1 – August’s first reading. Yet despite this downward revision, 58.8 is still a strong reading indicating that the UK economy is enjoying a surge in activity post lockdown.
However, questions are being raised over the outlook for the UK economy and the chances of this mini boom continuing. With the government’s job support scheme coming to and end and unemployment set to rise, the outlook is looking shaky. Adding to the uncertainty, the government hasn’t laid out the next steps.
Attention will now turn to the Bank of England Governor Andrew Bailey who is due to speak again later today. His comments will be closely eyed.
The Australian Dollar is trading on the back foot after trade numbers failed to impress. Australia’s July trade balance was a fundamental disappointment. The Trade surplus was AUD 4.6 billion, less than the 5.8 billion forecast. Imports rose 1% to 7%. However, exports slumped to -4% from +3%.
Whilst gold exports have provided support to the numbers political tensions between Australia and China are also starting to show up in the figures. China’s trade ban on a range of agricultural products was evident in the data with grain exports sliding almost 40% and meat falling 10%.
Investors will now look ahead to the release of retail sales data. Analysts are expecting confirmation of a 3.3% increase month on month in July.
