The AUDGBP exchange rate has finally broken out of a stubborn trading range that has been in place since the end of January with the UK Pound seeing strong gains. Economic data has favoured sterling while Australia grapples with the coronavirus once again.
AUDGBP broke below the 0.5500 level this morning and could capitalise with further gains as Aussie Dollar bulls retreat.
Australian Trade Figures Lower than Expected
Australia saw a trade surplus of A$7.5 billion in February, according to the Australian Bureau of Statistics. The number was less than the forecast of A$9.7 billion, while January’s number saw a revision lower.
Exports from Australia were lower by 1% on the month to A$38.9 billion after climbing 6% percent in January, while imports were 5.0% higher from the 2% percent in the previous month.
The numbers also come after a report from Australia’s Department of Foreign Affairs and Trade, which said that China’s thirst for iron ore exports is hiding the slump in other products. Excluding iron ore, goods exports to China slumped by 40% in the last six months of 2020, compared to the same period in 2019. This is due to the trade spat between the two countries which saw China putting tariffs on some Australian products. Australia’s coal exports were the worst-hit with China taking zero in January, compared to A$1.4bn six months earlier. The Australian dollar would get a boost if the trade relationship between the two countries can be resolved quickly.
UK and Aussie PMIs Released
Today also sees the release of manufacturing PMI figures for the UK and Australia with the latter coming in near expectations at 56.8. The UK will now look to capitalise on last month’s strong move to 55.1 with analysts expecting a read of 57.9. The two countries see their economies driven by services, more than manufacturing, and this will reflect in any market move in the pound.
Yesterday also saw revisions to the final GDP number for Q4 in Britain, with the country bouncing more sharply from its worst ever year. Traders are now focused on the path forward as the UK gets closer to reopening its economy further.
Brisbane ended a snap lockdown of a few days after the city reacted to two virus cases. It’s an odd strategy that Australia follows because the country quarantines travellers for ten days according to the scientific requirements, but the lockdowns are usually of around three days.
The Aussie dollar is losing ground this morning as the government looked set to miss their targets for vaccinations. The plan to have made six million doses available by mid-May is now looking unlikely. More than 650,000 in the country have received their first vaccine dose, which is well behind initial estimates.
Health Minister Greg Hunt and Prime Minister Scott Morrison are feeling the heat with their targets coming nowhere near the, “four million vaccinations by the end of March,” statement by Morrison in January.
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