China slowdown causes AUD weakness against GBP

AUDGBP Continues to Rise, But How Long For?

The world’s second largest economy China has published figures that show both import and export growth has slowed for the second month in a row. Imports rose by only 4.7% in July compared with 6.3% in June and exports have also slowed in the last few months. This has two main factors. One is that the Bank of China now has room to ramp up its stimulus efforts on monetary policy and two the wide impact on the more commodity-based currencies such as the Australian Dollar, NZD and ZAR.

The Australian Dollar has witnessed record growth in recent times and the strength of the currency is showing the same. However, with a slowdown in China this could see the Australian Dollar encounter some short term weakness. Indeed, this morning we have seen the GBPAUD exchange rate improve to 1.4861 at the highest point this morning. We have other releases from the UK this week to include the Bank of England minutes due out on Wednesday morning. With the recent Quarterly Inflation Report last week it will be interesting to see whether or not the vote was unanimous for keeping interest rates on hold. If there is any sign that some members of the MPC were in favour of cutting interest rates we could see a short dip for the Pound.

With the Olympics now over and UK Retail Sales due out on Thursday this could provide us with a sign as to how the economy has held up during the event. If you need to make a currency transfer into Australian Dollars and would like to find out how to save money compared to using a bank feel free to drop me an email Tom Holian teh@currencies.co.uk