Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Muted as Victoria’s Death Toll Surges
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained flat on Wednesday morning. This left the pairing trading at around AU$1.8256.
The Australian Dollar remained under pressure today as risk sentiment was hit by a rising coronavirus death toll in Victoria.
Wednesday saw the country’s second-most populous state record its second-deadliest day.
Market sentiment was also hit by the news that the government intends to extend a state of emergency by another year.
According to Brad Smoling, Managing Director at Smoling Stockbroking:
‘We are sort of in the eye of the storm and there is more bad weather coming for the Australian economy.
‘The only saviour will be some of the commodities, the rest of the economy is really suffering.’
Chinese Diplomat Warns Against a ‘Shadow’ in Aussie-China Relations
Added to this, a top Chinese diplomat warned against a ‘shadow’ over relations between Beijing and Canberra.
Tensions between the two nations have increased in recent months. This is after Australia called for an international inquiry into the origins of the coronavirus.
Today, Wang Xining, China’s deputy head of mission in Canberra, dismissed concerns about the country’s attempts to influence Australian politics.
Speaking to the National Press Club in Australia, Wang noted:
‘I don’t see any reason for whining about your constitutional fragility and intellectual vulnerability.
‘We should not let a cold heart and a dark mind cast a shadow over our partnership.’
Sterling (GBP) Muted Ahead of Highly-Anticipated Fed Speech
The Pound remained flat against the ‘Aussie’ during today’s session after making gains against most of its rivals during yesterday’s session.
Sterling was largely driven by a jump in risk sentiment following reports of an upbeat call between officials from Beijing and Washington.
The currency shrugged off the latest downbeat data which showed the country’s monthly retail sales fell unexpectedly this month.
According to Morten Lund, Nordea Markets analyst:
‘It’s much more about general risk sentiment. We also have a weaker dollar that has to some extent helped Sterling.’
The pairing remained flat as traders also awaited the latest US data and a key speech from the Federal Reserve’s Jerome Powell.
Risk appetite declined as traders awaited the highly-anticipated speech from the Fed’s chair.
Minori Uchida, head of global market research at MUFG Bank in Tokyo said:
‘I expect Powell to use forward guidance to send a dovish message that rates will remain low for a long time, which feeds into Dollar weakness.
‘You could say we are in a long-term correction of excessive Dollar strength.’
A dovish Fed could weigh on both the riskier Pound and Australian Dollar and leave the currencies struggling to make gains at the end of the week.
Pound Australian Dollar Outlook: BoE in Focus This Week
Looking ahead to this evening, the Pound (GBP) could edge lower against the Australian Dollar (AUD) as traders focus on the Bank of England (BoE).
The bank’s Chief Economist, Andy Haldane is expected to give a speech later today. Traders will be awaiting any hints the BoE will send interest rates into negative territory which will send GBP lower.
Meanwhile, the ‘Aussie’ could also remain under pressure following the release of the latest Private Capital Expenditure data.
If expenditure plummets further than expected in the second quarter, it will leave the Pound Australian Dollar (GBP/AUD) exchange rate flat.