Strong Australian GDP Gives AUD Temporary Boost – GBP/AUD

GBP/AUD Drops to Low 1.80’s After AUD GDP Figures

 

Australian GDP figures for the first quarter of 2014 showed a surprise increase, beating estimates by 0.2%. As a result, the dollar gained ground against sterling, pushing the rate back down to near the 1.80 mark. The graph below shows GBP/AUD movement over the last 24 hours.

GBP/AUD 24 Hours

Gross Domestic Product figures for the antipodean economy revealed 1.1% growth in the first quarter of 2014, with an annual growth rate of 3.5%. The figures came as something of a surprise, beating estimates by 0.2%. It’s also the first time in two years that the annual growth rate has breached the 3% mark. The increase has been attributed to a surge in exports, reflecting the recent positive run of data releases that have been lending support to the Australian currency.IT was also announced on Tuesday that Australia’s currency account deficit had halved as a result of this surge in exports. The increase in exports is likely a result of an upturn in China’s manufacturing output; much of Australia’s exports are China-bound, with economic conditions in the world’s second largest economy often having a knock-on effect on the Australian economy and currency.

On the sterling side of the cross, it’s been a fairly quiet few days. The pound remains strong as economic conditions in the UK continue to improve, with many expecting an interest rate hike in early 2015. THe pound has gained significant ground against most of the majors over the course of 2014 as it became evident that the UK economic recovery had firmly taken root. The pound’s meteoric rise has led some speculators to comment on the possibility of the Bank of England attempting to weaken sterling. Indeed, Mark Carney stated at the last press conference that the strength of the pound may begin to hamper the economic recovery. This is of greatest concern against the euro, with the Eurozone being the UK’s main trading partner. A strong pound means expensive UK produced prducts to overseas buyers. This, of course, could start to hinder export numbers which would have a detrimental impact on GDP.

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