GBP/AUD Exchange Rate Rangebound as Risk-Sentiment Dampened by Covid-19 Drug Trial
The Pound to Australian Dollar (GBP/AUD) exchange held steady this morning after antiviral drug tests for the coronavirus failed its first clinical trial. The pairing is currently trading around AU$1.93.
The ‘Aussie’ suffered from the blow a blow to risk-sentiment after Gilead’s antiviral drug – Remdesivir – failed its first clinical trials.
The US firm Gilead Sciences commented in their statement:
‘[T]he study results are inconclusive, though trends in the data suggest a potential benefit for Remdesivir, particularly among patients treated early in disease.’
Meanwhile, trading in the Australian Dollar (AUD) has steadied as Australian banks are closed for Anzac Day.
Australian Dollar (AUD) investors are also becoming increasingly concerned over a second wave of job losses which could hit the Australian economy.
Fears over the coronavirus’ impact construction and the building industry are already taking its toll on the ‘Aussie’.
Jason Clare, the spokesman for the Australian Labor Party and minister for Housing and Homelessness, commented:
‘About a million Aussies are involved in building houses for other Aussies, but as construction on houses wraps up over the next few months, the construction pipeline for new work is drying up.’
‘And that means there’s a real risk that, for a lot of electricians and plumbers and carpenters around Australia, they could be out of work.’
Pound (GBP) Steady as UK Retail Sales Plummet in March
The Pound (GBP) was left unmoved against the ‘Aussie’ today despite dire UK Retail Sales in March.
The UK retail sector was heavily compromised due to consumers’ restricted access to high street stores and local shops due to the government’s nationwide lockdown.
Thomas Pugh, an Economist at Capital Economics, commented:
‘With widespread lockdowns only beginning around the middle of March, retail spending looks like it will fall by much more in April, perhaps around 20-30% month on month.’
‘Clearly there is huge uncertainty as to how deep the downturn proves and how long restrictions remain in place, a fall in the region of 25% in GDP over the next few months seems likely.’
Sterling traders have reacted positively to news that Prime Minister Boris Johnson could be on the fast track to recovery.
US President Donald Trump said that Boris Johnson sounded ‘incredible’ on a phone call, adding that the Prime Minister sounded ‘ready to go’.
However, Health Minister Matt Hancock dampened hopes of a lockdown easing plan, saying that the Government would only ease lockdown measures when ‘safe to do so’.
GBP/AUD Forecast: Could Sterling Rise on News of Easing Lockdown Measures?
Australian Dollar (AUD) investors will be looking ahead to Wednesday’s release of the Reserve Bank of Australia’s (RBA) inflation report for the first quarter. However, if these confirm estimates and hold at 0.4%, we could see the ‘Aussie’ retain its relative stability.
However, with risk sentiment being the primary move of the ‘Aussie’, any signs of sinking oil prices could weigh on the Australian Dollar.
Pound (GBP) investors will be keeping a close eye on its domestic coronavirus developments next week. If the Government announces that cases have hit their peak, then we could see GBP rise as the UK readies itself to ease lockdown measures.