Low Eurozone Activity causes GBPAUD exchange rates to increase

AUDGBP Slumps Despite a Surge in Employment

GBPAUD exchange rates have had a nice surprise this morning following data from the Euro zone which showed business activity has contracted at its fastest pace in over three years in October according to Markit PMI. The figures from 46.1 to 45.8 and anything below 50 represents contraction.Companies also continued to cuts jobs across the region.

Also, news from China collected by HSBC has seen manufacturing activity slowing down again having a negative impact on the Australian Dollar. With less confidence in Europe this means less investor appetite for riskier currencies including the Aussie Dollar which is the reason why we have seen a mild weakening against Sterling with GBPAUD exchange rates hitting 1.55 on mid-market today.

Tomorrow morning we have the first release of UK GDP figures for the third quarter with some predictions of 0.6% for the UK. Anything above 0% represents the UK coming out of recession which in theory should be good for the Pound. However, do bear in mind that when this data is released although this will clearly be positive for the UK as a whole if the numbers are lower than expectation we may not see a Sterling rally. Personally, I believe these figures have been priced in to the currency markets so I wouldn’t expect to see too much movement after the release.

Friday will be the big day on the currency markets as we see the US release 3rd quarter GDP. As the world’s leading economy this provides us with a global barometer as to how the world markets may be impacted so for further up to date information as to how this will affect exchange rates please contact me directly Tom Holian [email protected]