GBP/AUD Exchange Rate Rangebound on Chinese GDP Figures
The Pound to Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range this morning as markets digest China’s latest GDP figures.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9648, virtually unchanged from this morning’s opening rate.
Australian Dollar (AUD) Flat as Chinese Economy Contracts
The Australian Dollar (AUD) is struggling to find momentum against the Pound (GBP) and the majority of its other peers this morning following the publication of China’s first quarter GDP figures.
According to data published by China’s National Bureau of Statistics, China’s economy shrank from 6% to –6.8% in the first quarter of 2020, the country’s first contraction of GDP on record.
China's virus-hit economy shrinks for first time in decades https://t.co/kEGyrYzKDN
— BBC News (UK) (@BBCNews) April 17, 2020
This of course comes as a result of economic activity being severely curtailed by the lockdown measures imposed by Beijing to help contain the outbreak of the coronavirus at the start of the year.
This has capped demand for the China-proxy ‘Aussie’ this morning, leaving the risk-sensitive currency unable to extend Thursday evening’s rally in spite of improving market sentiment in light of a number of countries seeking to ease their lockdown measures.
Pound (GBP) Subdued on No-Deal Brexit Worries
At the same time, the Pound (GBP) is also muted this morning amidst renewed concerns about a possible no-deal Brexit causing further disruption to the UK economy this year.
Head of the International Monetary Fund (IMF), Kristalina Georgieva called on the UK and EU yesterday not to rule out a delay to Brexit this year as not to add to the ‘unprecedented uncertainty’ created by the coronavirus crisis.
However, the response from the UK government was that it remains committed to exiting the Brexit transition period at the end of December whether or not a new trade deal is in place.
Observers fear that a deal is unlikely especially given the already short deadline has been narrowed further by disruption to negotiations in the wake of the coronavirus outbreak.
GBP/AUD Exchange Rate Forecast: Gloomy UK PMIs to Take Their Toll on Sterling?
Looking ahead, ahead to next week the Pound to Australian Dollar (GBP/AUD) exchange rate could come under some pressure with the publication of the UK’s latest PMI figures.
April’s preliminary reading is also most guaranteed to report that the UK’s private sector suffered it worth month on record, as the coronavirus lockdown brought economic activity to a screeching halt.
Adding to the pressure on Sterling may also be the UK’s consumer price index, with economists forecasting that domestic inflation will have slumped to just 1.2% in March, although given the Bank of England (BoE) is unlikely to be considering a rate cut any time soon its impact on GBP exchange rates may be minimal.
Meanwhile, for AUD investors the focus is likely to be on the minutes from the Reserve Bank of Australia’s (RBA) April policy meeting, where any hints at further monetary easing could drag on the ‘Aussie’.
On top of this the Australian Dollar is likely to remain highly sentiment to coronavirus developments, with the risk-sensitive currency likely to tumble should market sentiment sour.