The AUD GBP exchange rate was 0.14% higher on Tuesday as the pair finds some relief from recent selling. The latest PMI manufacturing data for Australia showed an improvement after the recent reopening of the economy. The UK also saw an improvement in its manufacturing and services industries, but cost pressures are a headwind for the UK recovery. A surge in iron ore prices also boosted the Aussie dollar.
The AUD GBP exchange rate was trading at 0.5390 ahead of further data this week.
Australian business activity boosted by the reopening
The Australian manufacturing sector expanded in November, according to the latest survey from Markit Economics with a manufacturing PMI score of 58.5.
That was higher than the 58.2 seen in October and moves further into expansionary territory. Growth in manufacturing output and orders picked up in November as the state moved further to reopening. That helped to boost hiring and purchasing. The economy should continue to see a boost from the relaxing of state and international borders.
The UK also saw PMI data released with both the manufacturing and services sectors showing an improvement in November. A head wind is being seen in the rising cost pressures on businesses due to inflation.
Australia will see the release of retail sales figures on Thursday with an improvement from 1.3% to 2.5% expected. The Bank of England Governor Andrew Bailey will also have a speech and may help to clarify the December rate meeting picture.
The UK Prime Minister Boris Johnson has also boosted the pound by reassuring the country that a move to further restrictions was not necessary with the current data. Europe has seen countries moving back to lockdowns to slow another virus spread.
Iron ore price surge adds support for Australian dollar
China’s benchmark iron ore futures were higher on Tuesday, hitting their 10% daily trading limit, as steelmakers looked set to resume production after a government clampdown over the past few months.
More mills are planning to increase output next month and markets are trading on the expectation of rising steel production in December.
China had managed to control its January-October crude steel production at lower levels in a bid to cool record prices. The country had seen record demand and that was hitting the country in the pocket.
The most actively traded iron ore futures contract on the Dalian Commodity Exchange soared up to 10% for January delivery.
Oil was higher on the day despite recent actions from governments to slow price rises. WTI crude had seen highs near $86 in the last weeks, but countries are now releasing reserves to dampen supply-demand pressures.
The UK and USA are part of the movement with the White House announcing a total of 50 million barrels being released from its Strategic Petroleum Reserve (SPR).
The Australian dollar versus the pound sterling has bene moving lower on UK rate expectations and that could restart this week if the BoE Governor gives a green light for a hike.
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