GBP/AUD Exchange Rate Buoyed Following RBA Meeting
The Pound Australian Dollar (GBP/AUD) exchange rate is trending higher this morning after the Reserve Bank Australia (RBA) warned about the impact of Victoria’s lockdown on Australia’s economic recovery.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.8228, up 0.6% from this morning’s opening rate.
Australian Dollar (AUD) Dips as RBA Acknowledges Pressures of Victoria Lockdown on Economic Recovery
The Australian Dollar (AUD) is edging lower this morning, in the wake of the Reserve Bank of Australia’s (RBA) latest policy meeting.
While the RBA opted to leave its monetary policy untouched as expected, AUD sentiment was dented somewhat by the RBA’s acknowledgement that Victoria’s lockdown is undermining the country’s economic recovery.
RBA Governor Philip Lowe warned:
‘The virus outbreak in Victoria and subdued growth in aggregate demand more broadly mean that it is likely to be some months before a meaningful recovery in the labour market is underway.’
Lowe also warned that Australia’s recovery is also highly dependent on the global fight against the coronavirus, adding:
‘Globally, an uneven economic recovery is underway after a very severe contraction in the first half of 2020
‘The future path of that recovery is highly dependent on containment of the virus. High or rising infection rates have seen a recent loss of growth momentum in some economies. By contrast, in China, economic growth has been relatively strong.’
Meanwhile, AUD investors will be kept on their toes by the publication of Australia’s latest GDP figures overnight.
These are expected to report a record slump of growth in the second quarter will have plunged Australia into its first recession since 1991, likely limiting the appeal of the ‘Aussie’.
Pound (GBP) On the Rise, But Could Impending Job Losses Cap Gains?
At the same time, the Pound is on the rise this morning as the UK’s latest PMI release confirmed UK manufacturing activity struck a six-year high in August.
According to data published by IHS Markit, the UK’s manufacturing index printed at 55.2 last month, up from 53.3 in July.
However, while GBP investors welcomed the bump in activity there were concerns that job losses are growing.
Rob Dobson, Director at IHS Markit said:
‘The labour market remains worryingly weak, with job losses registered for the seventh straight month. The downturn in employment may have further to run as the government’s furlough scheme is phased out unless demand rises sharply.’
This had fed into fears that the UK could be facing an unemployment crisis as the government’s furlough scheme is wound down over the next couple of months.