Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Muted despite Barnier’s Comments
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained largely flat, leaving the pairing trading at around AU$1.9578.
The Pound was provided with a slight boost by comments from the European Union’s Brexit chief negotiator. Although this did little to buoy GBP against the ‘Aussie’.
EU negotiator Michel Barnier stated a trade deal between the two was still possible this year despite the ‘very serious’ differences.
GBP also was provided with support after the Bank of England (BoE) decided not to follow the US Federal Reserve and unexpectedly cut interest rates in response to the coronavirus epidemic.
According to Lee Hardman, currency analyst at MUFG, the main driver of the Pound is going to be Covid-19, so ‘it is certainly possible that Brexit risk remains in the background as [a subsidiary] pound driver for longer now.’
Hardman added:
‘There has already been speculation that coronavirus-related disruption could prompt policymakers to alter the timeline for negotiations.
‘Market participants will for now focus on the June deadline set recently by the UK government by which they expect to have a ‘broad outline’ of a trade deal with the aim to finalise by September.’
Australian Dollar (AUD) Flat as Bushfire Crisis Hurts Retail Sales
The ‘Aussie’ remained under pressure today after data revealed Australian retail sales were hurt by the bushfire crisis.
The crisis led to a rough start to 2020 for retailers, although the statistics did not show signs the outbreak of coronavirus has had an impact on sales.
January’s sales slumped by a worse-than-expected -0.3%, and comes on the back of a disappointing and downwardly revised -0.7% in December.
‘Aussie’ sentiment was dampened as this was the first time since mid-2017 that retail sales had suffered two consecutive declines.
Commenting on this morning’s data, ABS director of quarterly economy-wide surveys, Ben James noted:
‘Bushfires in January negatively impacted a range of retail businesses across a variety of industries.
‘Retailers reported a range of impacts that reduced customer numbers, including interruptions to trading hours and tourism.’
Demand for British Staff Jumps to Six-Year High
The Pound remained muted today despite data showing that demand for staff in the UK jumped to a six year high in February.
The Recruitment and Employment Confederation’s (REC) index of demand for staff rose from 54.8 to 57.2 last month.
The data showed that permanent job placements rose at the fastest rate in 14 months, adding to signs that the economy continued to pick up after the general election.
Commenting on this morning’s data, KPMG’s vice chair James Stewart said:
‘Looking ahead, the current big unknown is the impact and influence the coronavirus may have on market confidence, let alone the lingering uncertainty around the actual Brexit deal.
‘Businesses will be hoping that next week’s budget provides some relief and investment to help get the UK back on a path to growth.’
Pound Australian Dollar Outlook: Weak Business Confidence to Weigh on AUD
Looking ahead to next week, the Australian Dollar (AUD) could slump against the Pound (GBP) following the release of NAB’s business confidence data.
If Australian business confidence slumps further than expected, ‘Aussie’ sentiment will slump.
Meanwhile, markets are going to continue to focus on the spread of Covid-19 and the economic impacts this will have.
If the coronavirus continues to spread, and the World Health Organization (WHO) declares the outbreak a pandemic, the Pound Australian Dollar (GBP/AUD) exchange rate will edge higher.
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