GBP/AUD Exchange Rate Edges Higher as Australian Economic Outlook Dims
The Pound to Australian Dollar (GBP/AUD) exchange rate rose by 0.2% this morning, with the pairing currently trading around AU$1.81.
The Australian Dollar (AUD) suffered today after Australian home loans for May fell to record lows from -4.4% to -7.6%. Consequently, ‘Aussie’ investors are becoming increasingly concerned about the nation’s economic recovery from the coronavirus pandemic.
Meanwhile, Australian investment lending for homes fell by -15.6%.
Australia’s Shadow Housing spokesman, Jason Clare, commented on today’s data:
‘The statistics released today by the Australian Bureau of Statistics emphatically show that warning was correct. New home loan commitments fell a record 11.6% in May.’
‘This massive drop in new home loans will lead to a drop in new housing construction and job losses in the housing construction industry.’
AUD has also suffered from weaker-than-expected Chinese data this month after China’s inflation data for June fell below forecasts to -0.1%.
With China being Australia’s largest trading partner, signs of the world’s second largest economy struggling have left many investors seeking out safe haven currencies like the US Dollar instead.
Pound (GBP) Edges Higher as Hopes Grow for British Economy Following Summer Statement
The Pound (GBP) rose today after Wednesday saw UK Chancellor Rishi Sunak unveil new stimulus measures to bolster the British economy.
As a result, many investors welcomed the Chancellors efforts to limit job losses and help recover the nation’s economy from the Covid-19 crisis. However, many analysts were more critical, citing other steps Mr. Sunak ought to have taken.
Today also saw the Institute for Fiscal Studies (IFS) announced that the UK’s coronavirus debt would potentially take ‘decades’ to pay back. As a result, investors are becoming increasingly concerned about the British economy going forward.
IFS Deputy Editor Carl Emmerson commented the debt crisis would be a task ‘not just for the current Chancellor, but also many of his successors’.
Mr Emmerson added:
‘It’s going to take decades before we manage that debt down to the levels we were used to pre this crisis.’
Brexit is also in focus today after UK-China relations have poised a big problem for post-Brexit trade. GBP investors are becoming increasingly worried that the UK could be facing a bumpy road post-Brexit owing to trade uncertainties and the effect of the Covid-19 crisis.
GBP/AUD Outlook: Could Positive Chinese Data Boost the Risk-Averse Aussie This Week?
Australian Dollar (AUD) investors will be paying close attention to Chinese economic data on Friday. Any signs of improvement in China’s New Loans and Money Supply data could buoy the risk-averse ‘Aussie’.
Risk sentiment will continue to drive the AUD/GBP exchange rate this week. Any further signs of a second-wave of the coronavirus – or an increasing number of cases in Australia – would prove AUD-negative.
Meanwhile, Sterling traders will be looking to the UK’s economic developments going forward. If the new Summer Statement continues to look set like it might help recover the British economy, then we could see the GBP/AUD exchange rate rise.