Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Falls as Risk Appetite Dominates Markets
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate edged around -0.3% this morning, leaving the pairing trading at around AU$1.9395.
Sterling edged lower on Monday as risk sentiment suffered after the US government made a fresh effort to blame China for the coronavirus outbreak.
On Sunday, US Secretary of State, Mike Pompeo said there was evidence the virus was created in a lab.
This heightened tension between the US and China and weighed on market optimism as many countries began to ease lockdown restrictions.
To the detriment of both the Pound and ‘Aussie’, traders began to flock back to the safety of the US Dollar.
According to Monex Europe’s currency analyst, Simon Harvey:
‘This morning’s session is being dominated by risk-averse trading as investors weigh the negative consequences to global growth from another escalation in U.S.-China tensions.
‘The headlines of further tariffs and supply-chain disruptions come at a time where global growth expectations are already fragile, causing currencies such as Sterling and the Euro to trade on the back foot this morning despite exit measures set to be announced or implemented in their respective economies.’
Meanwhile, Sterling also struggles to make gains this morning due to a lack of progress with Brexit negotiations.
Added to this, there is a fear Britain is falling behind in the easing of lockdown restrictions to allow for an economic recovery. This allowed the risk-sensitive ‘Aussie’ to make gains.
Australian Dollar (AUD) Edges Higher despite ANZ Job Ads Plummeting to a Fresh Record Low
The Australian Dollar was able to edge higher against the Pound this morning despite weak risk appetite and disappointing Aussie data.
‘Aussie’ gains were limited after ANZ revealed that April’s monthly job advertisements plummeted by -53.1%.
This fall is almost five times higher than the previous record, dampening AUD sentiment.
Added to this, the unemployment rate remains high in Australia, with more than 1.3 million unemployed and very few advertisements.
According to AMP Capital’s senior economist, Diana Mousina:
‘ANZ job advertisements more than halved – down by 53.1% – in April which was almost five times as large as the previous record fall during the GFC and shows the impact from the shutdown of non-essential businesses.
‘This is in line with the timely Seek job advertisements which were down more than 60% over April.’
Pound Australian Dollar Outlook: RBA in Focus
Looking ahead, traders will be focused on tomorrow’s interest rate decision from the Reserve Bank of Australia (RBA).
While the RBA are expected to keep interest rates unchanged, the Australian Dollar (AUD) could suffer losses against the Pound (GBP) if the bank is overly dovish.
Added to this, the ‘Aussie’ could suffer further losses if earlier CommBank PMI data disappoints traders. If April’s services PMI slumps further than expected, the Australian Dollar will slump.
However, Sterling could give up some of its losses following the release of the UK services PMI.
If data reveals the services sector suffered steep declines in output, plummeting to a fresh low, the Pound Australian Dollar (GBP/AUD) exchange rate will be left flat.
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