Rebound from One-Year-Low for Pound to Australian Dollar (GBP/AUD) Exchange Rate?

Pound to Australian Dollar Exchange Rate Rebounds Ahead of Friday PMIs

Update 16:44 BST 23/07/2020:

Despite a lack of fresh Sterling (GBP) support today, the Pound to Australian Dollar (GBP/AUD) exchange rate is rebounding slightly.

GBP/AUD still trends below the week’s opening levels. At the time of writing, the pair trends in the interbank region of 1.78.

Investors are selling the Australian Dollar (AUD) back from highs after days of strong performance. Concerns about the US economy are also weighing on market risk-sentiment.

The pair may remain under pressure however, especially if tomorrow’s key UK data disappoints.

While Australia’s upcoming PMI projections could cause some AUD movement, UK retail and PMI data could keep Sterling under pressure if they fall short.

(Published 11:15 BST 23/07/2020)

Pound to Australian Dollar Exchange Rate Tumbles Again after Limited Rebound

After an attempt to rebound yesterday afternoon, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is struggling to recover again today. Investors are hesitant to buy the Pound (GBP) amid broad Brexit uncertainties.

Last week saw solid losses for GBP/AUD, with the pair tumbling throughout the week. Ultimately, GBP/AUD shed almost two cents and closed the week near the interbank level of 1.79.

This week has seen a couple of recovery attempts so far, but they have all been brief and limited. GBP/AUD has spent most of the week falling and even touched on a low of 1.77 yesterday, the pair’s worst level in about a year.

At the time of writing on Thursday, GBP/AUD is still trending in the interbank region of 1.77 after failing to mount much of a recovery.

Concerns about global growth amid the coronavirus pandemic are doing little to keep pressure on the bullish Australian Dollar (AUD).

Pound (GBP) Exchange Rates Struggle for Ground amid Concerns over Brexit Outlook

The Pound (GBP) saw a brief jump in demand at the beginning of the week. Hopes for positive Brexit developments made investors want to buy the British currency back from its cheapest levels.

However, perceived UK-EU Brexit tensions have only worsened in recent sessions. Reports emerged suggesting the UK government was willing to give up on a UK-EU Brexit deal unless the EU softened certain stances. It caused fears of a possible no-deal Brexit to be revived.

Today marks the final day of this week’s UK-EU negotiations. For now, analysts believe markets are closely watching for potential signals on which way negotiations could be headed.

Marshal Gittler, Head of Investment Research at BDSwiss Group, said:

‘watch the tone of the statements coming out of today’s final meetings to see if they are of a conciliatory or confrontational nature,’

Australian Dollar (AUD) Exchange Rates Remain Appealing despite Economic Uncertainty

The Australian Dollar (AUD) has been one of the major currencies benefitting most from market risk-sentiment over the past few months.

Hopes for economic rebound from the coronavirus pandemic, as well as reaction to fiscal stimulus and trade developments, have often supported AUD demand.

This is despite fresh concerns about Australia’s economic outlook in recent weeks. As parts of Australia see new coronavirus lockdowns, there are concerns over whether the nation’s economic resilience will persist.

Australia’s Treasurer, Josh Frydenberg, forecast dire deficits and a weakened job market in fresh comments made today. He said:

‘These harsh numbers reflect the harsh reality we face. The economic outlook remains very uncertain. Recent events in Victoria are testament to this,

These deficits reveal the real cost to the budget of protecting lives and livelihoods from the coronavirus.’

Pound to Australian Dollar (GBP/AUD) Exchange Rate Could Rebound on Tomorrow’s Data

While the Pound (GBP) outlook remains filled with concerns and the Australian Dollar (AUD) finds support on persisting market risk-sentiment, surprising data could still cause movement.

Tomorrow will see the publication of July PMI projections for both Australia and the UK.

If Australia’s PMI projections come in much worse than expected, they could worsen concerns about the impact the coronavirus is having on Australia’s economic performance. This could weigh on the Australian Dollar’s appeal.

If Britain’s PMI projections are much better than expected they could boost hopes for a UK rebound from the coronavirus pandemic, though hopes are currently fairly low.

Britain’s June retail sales results, due for publication tomorrow, could also influence the Pound if it surprises investors.

Of course, Pound to Australian Dollar (GBP/AUD) exchange rate investors also remain focused on coronavirus and Brexit developments as well.

Josh Jeffery

Contact Josh Jeffery