The Pound Australian Dollar (GBP AUD) exchange rate began to recover late on Friday following a surprise drop in Chinese exports.
Australian Dollar Slips as Chinese Exports Fall
The Australian Dollar depreciated late on Friday following the release of China’s latest Trade Balance, which surprised investors with a trade surplus which fell from $44.23bn to $40.82bn in December, after analysts had widely predicted it to rise to $46.5bn.
The decline was largely driven by a drop in exports as they fell by 7.7%, the largest fall since 2009. As Australia’s largest trading partner the news came as a blow to the ‘Aussie’, causing it to trim some of this week’s gains against the Pound.
Pounds Gains Pressured by ‘Brexit’
Sterling has suffered a string of losses this week as ‘Brexit’ anxiety caused the Pound to weaken by around six cents against the Australian Dollar, the largest single weekly decline since the October flash crash.
GBP was driven even lower early on Friday as it was announced that Prime Minister Theresa May would be speaking next week on her approach to ‘Brexit’.
Investors were unimpressed about the announcement as they expect May to focus on her plans for immigration, increasing the likelihood of a ‘hard Brexit’ as EU officials have repeatedly stated that access to the single market is reliant on the acceptance of freedom of movement.
GBP AUD Forecast: UK Inflation Expected to Rise Next Week
The Pound may rally early next week with the release of the UK’s Consumer Price Index, which is forecast to report that the UK inflation rate climbed over 1.2% in December, as the low value of Sterling caused prices to rise at an accelerated rate.
Meanwhile investors in the Australian Dollar will be waiting for the first Westpac Consumer Confidence Index of 2017, with the ‘Aussie’ likely to rise if the survey shows some improvement.