The Pound Australian Dollar (GBP/AUD) exchange rate weakened on Monday, amid increased bets on hawkish action from the Reserve Bank of Australia (RBA).
Australia's PMI Manufacturing has nearly reached the neutral mark in March, jumping from 47.3 to 49.9. PMI Services edged higher from 54.2 to 54.4, contributing to PMI's Composite rise from 53.3 to 53.6, marking a 24-month high and indicating the third consecutive month of expansion.
Sterling and Euro rebound broadly today, bolstered by encouraging PMI data that suggests continued recovery momentum in both UK and Eurozone. For the Pound, the latest PMI readings indicate that UK's recovery from last year's recession is gathering pace. Meanwhile, rising cost pressures, particularly in the services sector, are heightening concerns about the sustainability of disinflation progress. These concerns are echoed by some BoE officials, who appear hesitant to consider interest rate cuts in the near future due to the persistent inflationary pressures.
Australian Dollar trades broadly higher today, lifted partly by resurgence in risk sentiment, as well as robust PMI data reflecting the cyclical recovery in Australian economy. Improvement in the economic outlook reduces the immediate need of a rate cut by RBA. Judo Bank, who complied the PMI data, warned about the possibility for another rate hike if economic activity continues to pick up while inflation remains elevated.