GBP/AUD Exchange Rate Rangebound as Markets Remain Cautious Over Covid-19 Vaccine Hopes
The Pound to Australian Dollar (GBP/AUD) exchange rate held steady this morning, with the pairing currently trading around AU$1.80.
The Australian Dollar (AUD) failed to gain on Sterling today following this morning’s release of May’s Australian trade balance report got May. Exports dropped by 4% to $35.7 billion, while imports fell by 6% to $27.7 billion, according to the Australian Bureau of Statistics.
NAB economist Kaixin Owyong commented on the report:
‘While disappointing expectations for a $9.0 billion surplus, the overall trade balance was largely unchanged from last month’s now downwardly revised $7.8 billion.’
‘The trade surplus remains elevated, following a larger fall in imports than exports over the past three months.’
Meanwhile, hopes of a Covid-19 vaccine have provided some hope for the risk-averse ‘Aussie’ today. This follows news that Germany’s BioNTech and Pfizer had found a degree of success in early-stage human trials.
Nevertheless, Joseph Capurso, head of international economics at Commonwealth Bank of Australia, was more cautious, however:
‘We are cautious. We have received positive news about potential vaccines in the past, but all are yet to see widespread production and distribution.’
As a result, the AUD/GBP exchange rate held steady today, despite growing hopes over a coronavirus vaccine lifting markets higher today.
Pound (GBP) Steady Despite Escalating UK-China Tensions Over Hong Kong
The Pound (GBP) held steady today as the UK Government is set to announce plans to get all children back to school. As a result, Sterling traders are becoming cautious optimistic that the UK could be making steady progress to reopen and further ease lockdown measures.
However, today saw an outbreak of controversy after the UK offered for millions of Hong Kongers to move to Britain. This follows protests in Hong Kong after Beijing imposed a new security law that has been condemned by countries worldwide.
A spokesperson for the Chinese Embassy in the UK said:
‘We firmly oppose this and reserve the right to take corresponding measures. We urge the British side to view objectively and fairly the national security legislation for Hong Kong, respect China’s position and concerns, refrain fromi nterfering in Hong Kong affairs in any way.’
Consequently, many Sterling traders are becoming jittery over the prospect of further tensions between the UK and China. Any signs that this could jeopardise post-Brexit relations would also prove GBP-negative.
Sterling investors will be looking ahead to today’s release of the GfK Consumer Confidence report for June. If consumer morale improves, then we could see the GBP/AUD exchange rate edge higher.
GBP/AUD Outlook: Could the ‘Aussie’ Suffer on Escalating Controversies Over Hong Kong?
Australian Dollar (AUD) traders will be awaiting tomorrow’s release of May’s Australian retail sales report. Any signs of improvement could boost the ‘Aussie’.
However, with concerns rising over Hong Kong, the Australian Dollar (AUD) could suffer from a sell-off of riskier assets. If Australia-China trade relations deterioate, then we could see the AUD/GBP exchange rate begin to fall.
Sterling investors, meanwhile, will be looking to tomorrow’s publication of the UK Services PMI for June. If this sinks deeper into contraction territory, then we could see GBP suffer.
The GBP/AUD exchange rate will remain sensitive to coronavirus and post-Brexit developments this week. If the UK’s coronavirus cases show any signs of increasing, then we could see the pairing sink.