Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Muted as UK Service Sector ‘Sucked into a Black Hole’
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained muted on Friday. This left the pairing trading at around AU$2.0426.
Sterling remained under pressure after UK PMI data revealed service sector activity suffered the largest fall since the survey began in 1997.
Britain’s largest sector saw a rapid drop in new work, and widespread job cuts as the PMI posted at 34.5 in March.
Commenting on this, Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply noted:
‘The services sector was sucked into a black hole and flung into the unknown by the forceful impact of the COVID-19 coronavirus, affecting every area of supply chains from transport to purchasing levels and job creation.
‘Predictably this had a severe knock-on effect on employment as job losses accelerated to levels last seen in June 2009. As the pandemic raged, some companies resorted to hasty redundancies and a freeze on job hires to stay afloat in the short-term.
‘The likelihood of a global recession is now a given, though its duration and severity has yet to reveal itself. One thing is for certain, with the lowest business optimism for over 20 years, the immediate outlook for the services sector is beyond grim.’
Panic Buying Leaves the Australian Dollar (AUD) Flat
Retail sales data revealed that Australians stockpiled groceries in February, as sales jumped 0.5%.
However, economists have warned that the boost is going to be short-term due to Covid-19 panic buying.
Added to this, risk appetite remained under pressure as investors moved away from riskier assets such as the ‘Aussie’.
After yesterday’s surge in oil prices and increased fear over the global economic fallout due to the coronavirus, traders moved back towards the safety of the US Dollar (USD).
Investors are waiting for this afternoon’s US non-farm payrolls data, which is likely to show a further drop in employment. This would provide further evidence the world’s largest economy is sliding into a recession, sending risk appetite lower.
Pound Australian Dollar Outlook: Aussie Job Advertisement Data in Focus
Looking ahead to next week, the Australian Dollar (AUD) could slump against the Pound (GBP) following the release of job advertisements data.
If ANZ reveals the number of jobs advertised has severely plummeted, the ‘Aussie’ will suffer losses.
Meanwhile, Sterling could be left under pressure following the release of March’s construction PMI.
If data reveals the construction sector has also plummeted deep into contraction due to coronavirus, the Pound Australian Dollar (GBP/AUD) exchange rate will remain flat.