GBP/AUD Exchange Rate Sinks Despite US-China Coronavirus Controversy
The Pound to Australian Dollar (GBP/AUD) exchange rate dipped today, with the pairing currently trading around AU$1.9406.
The Australian Dollar (AUD) rose against Sterling despite rising tensions between the US and China over the coronavirus. This follows controversial comments from US President Donald Trump, who claimed the virus had originated from the Wuhan Institute of Virology.
Mr. Trump told Fox News:
‘I think [China] made a horrible mistake and they didn’t want to admit it…’
‘My opinion is they made a mistake. They tried to cover it, they tried to put it out. It’s like a fire.’
As a result, risk-sentiment has been compromised over growing fears that the US could announce new tariffs on China, which Trump described as the ‘ultimate punishment for Beijing’.
– US President Trump said tariffs would be the ultimate punishment on China and warned that that if China doesn't buy US goods, the US will end the trade deal
— RANsquawk (@RANsquawk) May 4, 2020
With China being Australia’s largest trading partner, this has caused concern over Australia’s economy going forward. Nevertheless, ‘Aussie’ has performed well against the Pound (GBP) despite a risk-off market mood.
Meanwhile, the ‘Aussie’ has benefited from news that Australia continues to flatten the curve of its own Covid-19 crisis.
Pound (GBP) Falls Despite Rising Speculation Over UK Lockdown Easing Plans
The Pound (GBP) fell today despite growing anticipation for the UK Government’s announcement of easing the nationwide lockdown measures this week.
Today saw Ben Wallace, the British Defense Secretary, suggest that the two-meter distancing could be relaxed.
Mr. Wallace commented:
‘I strongly believe the public aren’t stupid. They read advice, they listen to the media. They took on board the government’s advice … and I think they will be perfectly able to read the government’s next stage when we get to it. I’m totally confident when it comes to the next step we will all together be able to move forward.’
Meanwhile, a leaked post-lockdown plan for businesses has also sparked off speculation over Downing Street’s next moves.
Sterling investors are paying close attention to any signs that UK workplace rules could come into action.
As a result, we could see a select number of businesses allowed to return to function, albeit under a set of strict hygiene measures. If this news is forthcoming today, then we could see the Pound rise against its peers.
GBP/AUD Forecast: Could Sterling Benefit as UK Businesses Are Allowed to Reopen?
Australian Dollar (AUD) investors will be awaiting tomorrow’s interest rate decision from the Reserve Bank of Australia (RBA). The bank is expected to hold its rates at 0.25%. However, any dovish commentary about the Australian economy would prove AUD-negative.
Meanwhile, US-China trade relations will continue to remain in focus this week. Should relations between the two superpowers deteriorate, then we could see the AUD/GBP/ exchange rate suffer.
Tomorrow will see the release of the final UK Markit Services PMI for April. If this falls significantly below consensus, then we could see the Pound suffer.
The GBP/AUD exchange rate will be directed by No 10’s announcement on lockdown easing plans this week. So, if businesses are permitted to open under certain restrictions, while other measures are eased off, then we could see Sterling begin to rise.