Pound to Australian Dollar Exchange Rate Flounders Wednesday
Updated 16:45 BST 15/07/2020:
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was kept under pressure near its lowest levels all week this afternoon.
After shedding virtually all of last week’s gains, GBP/AUD has spent today floundering in the interbank region of 1.79.
The Pound (GBP) has struggled to find support in today’s UK inflation data. Investors are anxious ahead of tomorrow’s UK job market report amid Bank of England (BoE) concerns about the health of domestic jobs.
Meanwhile the Australian Dollar (AUD) has benefitted from risk correlation. Signs of optimism in the hunt for a coronavirus vaccine are keeping investors willing to take risks.
(Originally published 10:08 BST 15/07/2020)
Pound to Australian Dollar Exchange Rate Volatile after Early-Week Slump
Investors have been selling the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate since markets opened this week. This has been due largely to broad selling in the Pound (GBP), as investors were disappointed with UK data.
Following last week’s GBP/AUD gains from 1.7975 to 1.8160, the pair has quickly shed most of those gains again.
GBP/AUD touched on a three week high of 1.8196 at the beginning of the week, before slumping. While UK data is helping GBP/AUD to rebound slightly this morning, the pair still trends near the level of 1.8000 after giving up most of last week’s gains.
Australian data has been mixed and Australian Dollar (AUD) investors are highly awaiting tomorrow’s Australian job market stats.
Pound (GBP) Exchange Rates Find Support as UK Inflation Beats Forecasts
Yesterday saw the Pound (GBP) plunge across the board. Investors sold the British currency from its best levels in reaction to news that Britain’s May growth rate had been notably lower than forecast.
It led to fresh concerns that Britain’s economy would not see a v-shaped recovery from the coronavirus pandemic. As Britain’s growth outlook worsened the Pound’s appeal faded and GBP/AUD fell.
However, today’s UK inflation rate report did beat market forecasts. It helped the Pound to rebound and steady a little higher after yesterday’s tumble.
Inflation came in at 0.6% year-on-year rather than the expected slowdown to 0.4%.
However, while the data was better than expected, analysts noted that it didn’t have a notably optimistic impact on the UK impact, especially following the poor growth data.
The small rise in UK CPI inflation from +0.5% in May to +0.6% in June probably won’t be sustained for long as the effects of the Chancellor’s VAT cut and the “Eat Out to Help Out” scheme will probably drag inflation just below zero in the coming months. https://t.co/WKDNGkCJ7v pic.twitter.com/dszChOGheT
— Capital Economics UK (@CapEconUK) July 15, 2020
Australian Dollar (AUD) Exchange Rates Dampened by Trade Tensions
The Australian Dollar (AUD) has been one of the market’s more appealing risk and trade-correlated currencies throughout the coronavirus pandemic.
However, its appeal has been softened lately. The ‘Aussie’ is struggling to hold its best levels after gaining on the Pound yesterday.
Investors have been more hesitant to buy the Australian Dollar since a fresh outbreak of coronavirus infections in the Australian State of Victoria. This caused a lockdown in the state and this has dampened hopes for a strong Australian economic rebound.
GBP/AUD also rebounded a little more easily due to fresh US-China trade tensions. It comes as US President Donald Trump ordered an end to Hong Kong’s special status under US law.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Awaits Employment Reports
The Pound to Australian Dollar (GBP/AUD) exchange rate has tumbled this week, but the pair could see fresh gains depending on how Thursday’s key data unfolds.
Thursday’s Asian session will see the publication of Australia’s June job market report. This will be followed by Britain’s May job marker report during the European session.
Australia’s job market plays a key part in Australia’s economy. If there are signs that Australia’s jobs have not weathered the coronavirus pandemic as well as hoped, the Australian Dollar (AUD) could tumble.
Stronger than expected UK jobs data could boost hopes for UK economic resilience. This could give the Pound (GBP) stronger support.
Overall, tomorrow’s job data has the potential to cause a shift in Pound to Australian Dollar (GBP/AUD) exchange rate movement if it surprises investors.