Pound to Australian Dollar Exchange Rate Trailing Lower before Markets Close
The Australian Dollar’s (AUD) appeal looks to persist even as risk-sentiment continues to weaken, as the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is tumbling. The Pound (GBP) lacks the drive to hold this week’s gains.
Since opening this week at the interbank level of 1.79, GBP/AUD has seen mixed movement. GBP/AUD touched a 2020 low of 1.78 earlier in the week, but rebounded to a weekly high of 1.80 yesterday.
At the time of writing on Friday morning though, GBP/AUD had shed most of those gains. GBP/AUD was trending just above the week’s opening levels.
While global coronavirus fears intensified, the ‘Aussie’ remains appealing. Still, if the Reserve Bank of Australia (RBA) disappoints markets next week, recent ‘Aussie’ strength could still unravel.
Pound (GBP) Exchange Rates Struggle as Outlook Continues to Weigh
Investors bought the Pound (GBP) in the middle of the week. Sterling benefitted from investors buying the currency back from its cheapest levels in profit taking.
On top of this, speculation rose that if any Brexit developments are made, they could be made in the coming weeks.
However, the Pound’s appeal is highly limited, as a number of factors continue to shadow over the outlook.
Britain’s coronavirus situation remains full of uncertainties and the UK government’s handling has been criticised. On top of this, fears that a no-deal Brexit is becoming increasingly likely are keeping a lid on the Pound’s potential to advance.
German Chancellor Angela Merkel said today that Germany was ‘preparing on every level for a no-deal Brexit’.
Australian Dollar (AUD) Exchange Rates Boosted by Data despite Risk-Aversion
The Australian Dollar (AUD) is a currency often correlated to market risk and trade sentiment. As a result, it has come under pressure this week as global coronavirus fears soar.
The number of coronavirus cases in the US is surging, worsening fears about the pandemic’s impact on the US economy. This is making investors more hesitant to take risks.
Despite this though, the Australian Dollar remains broadly appealing. Investors are optimistic about Australia’s handling of the coronavirus, and Australian data continues to show economic resilience amid the pandemic.
This morning’s Chinese data also bolstered the Australian Dollar. As China is Australia’s biggest trade partner, China’s strong June services PMI further bolstered AUD appeal.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Awaits Reserve Bank of Australia (RBA)
For now, the Australian Dollar (AUD) broadly appealing. Even as risk-sentiment lightens, the Australian Dollar is still benefitting from hopes around Australia’s resilient economic outlook.
As a result though, the ‘Aussie’ could take a hit if the Reserve Bank of Australia (RBA) takes an unexpected tone next week.
The RBA will hold its July policy decision during Tuesday’s Asian session.
If the bank takes a more cautious tone than expected on Australia’s economy due to ‘second wave’ fears, the Australian Dollar could shed some of its recent strength.
As for the Pound (GBP), next week’s UK data calendar will be a little quieter. Pound investors are instead likely to become more focused on Brexit developments.
If there are any signs of optimism that a Brexit deal is getting closer, the Pound to Australian Dollar (GBP/AUD) exchange rate could see a more solid recovery.