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Pound Australian Dollar (GBP/AUD) Exchange Rate Headed Towards 2020 Low Ahead of UK GDP

Australian Dollar Currency Forecast

Improved NAB Business Confidence Weighs on Pound Australian Dollar (GBP/AUD) Exchange Rate

A surprise improvement in the NAB business confidence index saw the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate slump sharply on Tuesday.

As forecasts had pointed towards a fresh deterioration in sentiment in April the index instead saw a modest improvement from -66 to -46.

Although sentiment remained in negative territory this still offered evidence that business confidence is starting to recover once again, lifting the Australian Dollar (AUD) against its rival.

While market jitters over the risk of a second wave of Covid-19 infections lingered this was not enough to prevent the GBP/AUD exchange rate from shedding fresh ground.

GBP/AUD Exchange Rate Braces for UK Gross Domestic Product Plunge

Support for Pound Sterling (GBP), meanwhile, proved largely limited as anticipation for the first quarter UK gross domestic product report picked up.

Given the dramatic impact of the initial lockdown the quarterly growth rate appears set to demonstrate a major drop in momentum.

If growth clocks in at -2.5% as forecast this would leave investors with little incentive to favour the Pound over its rivals.

Even though the government is now taking steps to reopen the economy any major growth recovery seems unlikely in the first half of the year, keeping the UK on course for a deep recession.

Unless the growth data can better forecasts, showing a smaller initial hit from the Covid-19 crisis, the Pound could experience a fresh leg of losses on Wednesday.

With the Bank of England (BoE) already showing signs of increased caution a dismal GDP report could easily drive the GBP/AUD exchange rate to a new 2020 low.

Sharp Uptick in April Unemployment Forecast to Drag on Australian Dollar

The mood towards the Australian Dollar could sour on Thursday with the release of April’s set of Australian labour market data.

Investors anticipate a solid uptick in the unemployment rate from 5.2% to 8.3% on the month, demonstrating the impact of Covid-19 restrictions.

Fresh evidence of the negative impact that the global pandemic has already had on the Australian economy could see AUD exchange rates come under renewed pressure.

As long as markets see cause for concern over the recent uptick in infections seen in Germany, China and South Korea an increased sense of risk aversion could weigh down the antipodean currency.

On the other hand, signs that governments remain committed to tentatively reopening their economies in the months ahead could help to limit the downside potential of AUD exchange rates.

As stronger levels of global trade would help to return the Australian economy to a positive footing any further easing in Covid-19 anxiety may see the GBP/AUD exchange rate sliding lower.