The US Dollar is trading higher against both the Pound Sterling (USD/GBP) and Australian Dollar (USD/AUD) exchange rates today, as markets reconvene from the winter holidays.
There have been multiple global growth concerns in recent years, with many experts fearing a slowdown in China could hinder progression the world over. Today’s weak Chinese factory output figures have solidified many concerns, and the Australian Dollar to US Dollar (AUD/USD) exchange rate slipped by 0.6% to reach the lowest level since January 2016 on the poor numbers from Australia’s largest trading partner. The AUD/USD exchange rate has been in danger of dropping below the 70 US cents mark, and as a key psychological level, should the pair dip below this threshold, it could easily spur more losses.
China’s Manufacturing Fall Sees Australian Dollar Drop Vs US Dollar
China’s manufacturing sector noted it’s first contraction in 19 months, which rippled into both the currency and stock markets. The Markit Manufacturing Purchasing Managers’ Index (PMI) slipped below the 50.0 benchmark which seperates expansion from contraction, reaching 49.7 in December, down from 50.2 in November. There have been other recent data disappointments from China too, which have caused lacklustre forecasts for the year ahead, with some suggesting the nation may be in for a tough time.
ING analysts wrote:
‘This data confirms our view that the economy is weak and that stimulus needs to arrive quickly.’
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
Meanwhile, investors in the Pound to US Dollar (GBP/USD) exchange rate will be looking towards the political agenda for movement. The US governement has been experiencing a partial shutdown as President Donald Trump goes head to head with Democrats over funding for his Mexican wall proposal.
Another event this week which could create USD/GBP exchange rate movement will be the US Change in Non-Farm Payrolls stat due out on Friday. The influential labour market figure has the potential to cause significant GBP/USD and AUD/USD exchange rate fluctuations.
In the UK, investors are gearing up for more political uncertainty in the form of Parliament’s vote on Theresa May’s Brexit proposals. British MPs are expected to vote on the proposals in the week commencing the 14th January, which could spur some rapid and unpredictable Pound Sterling exchange rate movement. The GBP/USD exchange rate is likely to remain under pressure from Brexit uncertainty until some clarity on Britain’s future can be brought to the table.
Today, the US Dollar to Pound (USD/GBP) exchange rate has been trending between levels of 0.7828 and 0.7906, while the US Dollar to Australian Dollar (USD/AUD) exchange rate trends in the region of 1.4186 and 1.4282.