Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Muted on Fresh Signs of Trade Tensions
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained flat, leaving the pairing trading at around AU$1.9024.
Tuesday saw the pairing remain flat after growing fears of a second wave of coronavirus infections dampened hopes for a global recovery.
The Chinese city of Wuhan, where the virus first emerged at the end of 2019 reported its first cluster of infections since the lockdown was lifted.
Added to this, fresh signs of trade tensions between the US and China spooked investors.
The risk-sensitive ‘Aussie’ remained under pressure as worries about new infections in China, Germany, and South Korea sent traders flocking to safety.
Against the safe-haven US Dollar, AUD slumped to a one-week low after China banned some Aussie meat imports. Although, the country’s trade minister downplayed this this issue.
Added to this, on Sunday grain growers said China plans to slap tariffs on Australian barley. Although, Australia’s government has downplayed links between trade moves and diplomatic tensions with China.
Commenting on this, AxiCorp’s chief global market strategist, Stephen Innes noted:
‘If it stays at beef and barley, then economically, it shouldn’t matter much for Australia.
‘The risk is, of course, that this broadens out to more critical areas such as iron ore, coal, education, LNG, etcetera.’
Sterling (GBP) Flat Ahead of Sunak’s Coronavirus Job Retention Scheme Announcement
Meanwhile, the Pound remained flat against the ‘Aussie’ as markets await the British government’s announcement on how to make workplaces safer as some businesses start to return to work.
Health Secretary Matt Hancock said the business ministry will set out details on how to make workplaces safer. He stated:
‘This stuff isn’t straight forward but we’ll be coming forward with a huge amount of more detail on how to make work places safe today.
‘We work not only with employers but also with the trade unions who last night called what we’re coming out with a step forward.’
Added to this, Finance Minister, Rishi Sunak is due to make a statement on the government’s economic package.
Prime Minister Boris Johnson said Sunak would talk about the Coronavirus Job Retention Scheme. This also likely left GBP under pressure today.
Speaking to LBC radio, Hancock stated:
‘Obviously it can’t last for ever and we are going to have to make changes. He’s going to announce the details of that.’
When questioned about whether the Finance Minister would cut the payments from 80% of the wages the staff on temporary leave would receive to 60%, Hancock noted:
‘I’m no going to steal the words from Rishi’s mouth.’
Pound Australian Dollar Outlook: Consumer Confidence and GDP in Focus
Looking ahead to Wednesday, the Australian Dollar (AUD) could suffer losses against the Pound (GBP) following the release of consumer confidence data.
If Westpac reveals consumer confidence in Australia has plummeted further than expected in May, the ‘Aussie’ will fall.
Meanwhile, Sterling could quickly give up some of these losses following the release of preliminary growth data.
If UK Q1 GDP slumps further than expected, Sterling sentiment will be left dampened. This will leave the Pound Australian Dollar (GBP/AUD) exchange rate flat.