GBP/AUD jumps after RBA rate decision, GBP/EUR steady

A less-than-impressive UK manufacturing report prevented the pound from clinging to its best levels on Monday, but the British currency managed to stand firm against some of the majors.

GBP/EUR has been fluctuating between €1.1417 and €1.1380, GBP/USD has fallen from $1.3020 to $1.2934, GBP/AUD surged from AU$1.6859 to AU$1.7018, GBP/NZD recovered from a low of NZ$1.7723 to NZ$1.7815 and GBP/CAD drifted from C$1.6904 to C$1.6799.

What should we be looking out for today? Keep scrolling to find out…

What’s been happening?

The pound eased away from its recent highs on Monday as the UK’s latest manufacturing report disappointed forecasts.

While the UK manufacturing PMI was expected to dip in June, it declined by more than expected and hit a three-month low of 54.3

Markit economist Rob Dobson said of the figure; ‘The UK manufacturing sector largely weathered the uncertainty of a general election and start of formal Brexit negotiations to eke out further output growth at the end of the second quarter. However, the rate of expansion eased again in June, with growth weakening across the consumer, intermediate and investment goods industries.’

Although the manufacturing sector only accounts for around 10% of total GDP, the subpar figure was enough to see Sterling drop from a five-week best against the US dollar.

The pound’s losses against the euro were less substantial however, despite the fact that the Eurozone’s own manufacturing index impressed and a separate report showed unemployment in the currency bloc to be at an 8-year low.

Meanwhile, GBP/AUD jumped by 0.7% this morning in response to the Reserve Bank of Australia’s (RBA) interest rate decision. The central bank left rates on hold and kept the tone of its statement neutral – indicating that borrowing costs are unlikely to rise anytime soon.

What's coming up?

Today we’ve got a few things to watch out for, including the UK’s construction PMI.

With the construction sector making up such a small percentage of GDP, the measure is unlikely to have too much of an impact on the pound unless it deviates massively from forecasts. As it stands, the index is expected to drift from 56 to 55.

The Eurozone’s producer price index will be a low impact release, but a speech from European Central Bank (ECB) Executive Board Member Peter Praet may spark some euro movement. While cautionary comments from the official would keep the euro under pressure, hints that stimulus could be tightened could send EUR exchange rates higher.

Meanwhile, the latest dairy auction may offer GBP/NZD some direction. If the price of New Zealand’s most lucrative export drops, the New Zealand dollar is likely to fall along with it. Rising dairy prices, on the other hand, would be NZD supportive.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Phil McHugh,
Trading Floor Manager

Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure.