Uptick in Trade Balance Help AUD/GBP to Hold Steady
The Australian Dollar Pound (AUD/GBP) exchange rate appears to have stabilised towards the end of Thursday’s session following the release of Australia’s latest trade figures.
At the time of writing AUD/GBP is currently trading close to its opening levels, after falling back from its initial gains.
Australian Dollar (AUD) Welcomes Upswing in Trade
The Australian Dollar initially rallied during the Asian session on Thursday as markets reacted to Australia’s latest trade figures.
According to data published by the Australian Bureau of Statistics (ABS), Australia enjoyed a trade surplus of AU$1.055bn in January.
This was up from a deficit of –AU$1.1146bn in December and easily beat expectations of a more modest surplus of AU$0.3bn.
Analysts are hopeful that the quick rebound in trade, will have helped the Australian economy perform a little more strongly this year than it did at the end of 2017.
Andrew Hanlan, Senior Economist at Westpac said;
‘The quick return to trade surplus following a one-off deficit in December represents a positive start to the March quarter.’
‘This is a welcomed turnaround given that in the December quarter a temporary dip in export volumes, of 1.8%, subtracted a sizeable 0.4 percentage points from activity.’
However the ‘Aussie’ found itself forced to relinquish some of these gains again the Pound by the start of the European session as Sterling picked itself up following some Brexit concerns on Wednesday.
GBP found itself slumping on Wednesday following the release of the EU’s draft guidelines, which may it clear that the UK would not be allowed to ‘cherry-pick’ parts of the single market.
However the Pound was able to rally later on Thursday on suggestions that it may have been oversold.
AUD/GBP Forecast: Will Narrowing UK Trade Deficit Help to Strengthen Sterling?
Looking ahead the UK will publish its own trade balance figures on Friday with the AUD/GBP exchange rate possibly sliding if Britain’s trade deficit is showed to have narrowed as forecast.
Moreover the release of the UK’s latest industrial production figures may also support the Pound tomorrow as they are expected to show a sharp rebound in British factory output in January.
Meanwhile the Australian Dollar could come under increased pressure later this week as Trump prepares to implement his plans to tariff US steel imports.
The move is likely to unsettle markets who fear that this could spark a wider trade war, which in turn may prompt investors to shy away from commodity-correlated currencies such as the ‘Aussie’.