GBP/AUD Exchange Rate Subdued as UK Lockdown Remains in Place
The Pound to Australian Dollar (GBP/AUD) exchange rate is rangebound so far this morning as the UK’s coronavirus lockdown remains in place.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.8986, having edged down ever so slightly from this morning’s opening levels.
Pound (GBP) Flat as Johnson’s ‘Conditional’ Lockdown Plan Fails to Inspire Confidence
The Pound (GBP) is stuck trading on the back foot this morning as markets reacted with disappointment to Boris Johnson’s lockdown statement over the weekend.
Billed as a ‘comprehensive plan’ on how the UK would ease its lockdown measures and start reopening the economy, Johnson’s statement raised almost as many questions as they answered.
In a ministerial address, Boris Johnson unveils "conditional plan" to reopen society, allowing people in England to spend more time outdoors from Wednesdayhttps://t.co/XQK3OxhTTG pic.twitter.com/ahvPl3aHvL
— BBC News (UK) (@BBCNews) May 10, 2020
Johnson announced the lockdown would remain in place for another three weeks, but the ‘actively encouraged’ workers in construction and manufacturing to return to work from Monday.
His ‘conditional plan’ would then see the phased reopening of shops and schools at the start of June at the earliest, with parts of the hospitality industry potentially reopening from the 1st of July.
However, the PM’s statement was light on details, leading to business groups to call for clarification.
Adam Marshall, director of the British Chambers of Commerce (BCC)
‘Businesses will need to see detailed plans for the phased easing of restrictions, coordinated with all nations across the UK and supported by clear guidance.’
Johnson is expected to offer more information on the government’s plans when he faces MPs in parliament later today.
Australian Dollar (AUD) Buoyed by Risk-On Trade
Meanwhile, the Australian Dollar (AUD) roared higher in early trade this week, surging during today’s Asian session as investors went risk-on.
This comes amidst hopes for a faster-than-expected global economic recovery as a growing number of countries begin easing their coronavirus lockdowns and seek to restart their economies.
David Madden, market analyst at CMC Markets UK, comments:
‘The shocking moves that were seen in global markets in February and March reflected the views that economies were to be severely hit by the Covid-19 crisis, but in recent weeks a number of countries have taken steps to reopen aspects of their economies and that progress has fueled the bullish sentiment.’
Further buoying the market mood is the apparent easing of tensions between the US and China, after Donald Trump has refrained from further criticising Beijing’s response to the coronavirus outbreak over the weekend.
Further GBP/AUD Exchange Rate Forecast: Plunge in UK GDP to Weigh on Sterling Sentiment?
Looking ahead, the Pound to Australian Dollar (GBP/AUD) exchange rate is likely to face some notable headwinds this week with the publication of the UK’s latest GDP estimate.
Wednesday’s data release is expected to report that, UK economic growth collapsed by 2.5% in the first quarter of 2020 as the coronavirus crisis saw the much of the economy shuttered in March.
This would be the largest contraction GDP since the 1970’s and is likely to limiting any upside in the Pound this week.
In the meantime, the publication of National Australia Bank’s (NAB) Australian business confidence index could dent the ‘Aussie’ in overnight trade as economists forecast business sentiment will have plunged to a new all-time low in April.