Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Muted as Coronavirus Cases Near Two Million
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained largely flat on Tuesday morning. This left the pairing trading at around AU$1.9577.
As the number of coronavirus cases continuing to rise, nearing two million, there is a sense of cautious optimism that the curve is being flattened.
However, the economic outlook continues to look uncertain as many countries extend their lockdown period. The UK is likely to follow these countries, extending its lock down period.
Meanwhile, the Pound was unable to make significant gains against the ‘Aussie’ after data from China boosted risk sentiment slightly.
Trade data from China revealed a much less gloomy picture of the economic damage of Covid-19 than previously expected.
Exports in March slumped -6.6% compared to a year earlier, although this was much better than the forecast -14% slump.
According to Chris Weston, head of research at Melbourne brokerage Pepperstone:
‘The market is front-running the idea that we’re going to see the case count dissipate.
‘The baton is now being firmly handed over to the reality of the situation in economic data.’
Aussie Business Confidence Plummets to Record Low
The Australian Dollar struggled against the Pound this morning after data revealed business confidence in the country plummeted to the lowest level on record.
Aussie business sentiment fell to -66 from -2, the largest drop in the survey’s history after shutdowns designed to slow the spread of coronavirus weighed on the economy.
In a statement, National Australia Bank (NAB) that ran the survey noted:
‘Recreation and personal services recorded the largest hit, unsurprising given the effective shut down of these sectors. Forward orders collapsed to their lowest level on record, while capacity utilization also saw a sharp decline. Overall, the decline in forward orders and business conditions imply a large fall in GDP in the next 6 months.’
Added to this, the country’s Treasury also expects unemployment to skyrocket close to 10% this quarter. They added that the rate would have been near 15% if fiscal measures were not introduced.
According to NAB chief economist, Alan Oster:
‘While it is unlikely that the unprecedented policy support targeted at the business sector will be unable to offset the near-term pain, it will be very important in supporting activity in the recovery phase.
‘There is significant risk that a blow to confidence of this magnitude for an extended period could lead to ongoing fallout in terms of employment growth and capital expenditure by business.’
Pound Australian Dollar Outlook: Weak Aussie Consumer Confidence in Focus
Looking ahead to Wednesday, the Australian Dollar (AUD) could continue to suffer losses against the Pound (GBP) following the release of consumer confidence data.
If Westpac reveals that consumer sentiment has plummeted further than expected in April, the ‘Aussie’ will slide.
Meanwhile, coronavirus is likely to remain in focus for markets this week as markets continue to assess the economic damage the virus has caused.
If risk appetite declines once again, it will weigh on the risk-sensitive ‘Aussie’ and send the Pound Australian Dollar (GBP/AUD) exchange rate higher.