GBP/AUD Exchange Rate Stable Following UK GDP Release
The Pound to Australian Dollar (GBP/AUD) exchange rate is rangebound this morning as the UK’s latest GDP estimate revealed a smaller-than-expected contraction of growth in the first quarter.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.893, virtually unchanged from this morning’s opening rate.
Pound (GBP) Steady on Better-than-Expected GDP Release
The Pound (GBP) is holding its ground against the Australian Dollar (AUD) and majority of its other peers this morning as investors react to the UK’s better-than-expected GDP figures.
According to data published by the Office for National Statistics (ONS) the UK economy shrank by 2% in the first quarter of 2020, its worst slump since the financial crisis but beating forecasts that growth would contract as much as 2.5%.
— Office for National Statistics (ONS) (@ONS) May 13, 2020
This slump in growth of course comes as a result of the coronavirus crisis, with the shuttering of most of the economy as part of the government’s lockdown efforts enacting a heavy toll on growth.
The ONS says:
‘In response to the coronavirus (COVID-19) pandemic, public health restrictions and social distancing measures have been put in place in the UK, leading to a widespread disruption to economic activity.
‘These measures have impacted upon the spending behaviours of consumers as well as how businesses and their employees operate. It has also affected the provision of services provided by government, including health and education.’
More worrying for GBP investors will be the ramifications for the second quarter. Given the UK’s lockdown measures were only officially in place for seven working days in the first quarter, markets will be bracing for an unprecedented slump in Q2 as most of the country remain shut for two months.
Australian Dollar (AUD) Buoyed by Improved Risk Tone
Meanwhile, the Australian Dollar (AUD) is finding support this morning, thanks to an improvement in market risk sentiment.
Easing global tensions with China and broad weakness in the US Dollar (USD) have helped to improve the appeal of the risk-sensitive ‘Aussie’ in early trade.
Further bolstering AUD exchange rates was Australia’s latest consumer confidence figures, which saw a surprise rebound in household sentiment this month.
GBP/AUD Exchange Rate Forecast: Surge in Australian Unemployment to Weigh on the ‘Aussie’?
Looking ahead, the Pound to Australian Dollar (GBP/AUD) exchange rate may accelerate in overnight trade with the publication of Australia’s latest jobs report.
April’s release is forecast to show that employment growth plummeted by over 500,000 last month, propelling the national unemployment rate from 5.2% to 8.3%, its highest levels since the 90s.
This is likely to weigh heavily on the ‘Aussie’ as it may increase the pressure on members of the Reserve Bank of Australia (RBA) following their peers at the Reserve Bank of New Zealand (RBNZ) in considering the possibility of negative interest rates.
Meanwhile, the focus for GBP investors will turn to Brexit as UK and EU negotiators attempt to make progress on a post-Brexit trade deal ahead of June’s deadline to decide whether to continue negotiations.