The Pound saw mixed movement when markets opened today as GBP/AUD adjusted from the recovery attempt seen last week.
UK coronavirus fears are rising while Australia’s coronavirus situation gradually improves, which is keeping GBP/AUD under pressure at the beginning of this week.
Last Week: Limited Pound Recovery Attempt amid Australian Dollar Resilience
For much of last week the Pound recovered from its worst levels on hope UK-EU Brexit talks could still end with a deal.
However, GBP gains came to an end at towards the end of last week’s session as the Bank of England (BoE) gave its clearest indication yet that negative interest rates could be a possibility.
The Australian Dollar, on the other hand, was appealing last week despite markets avoiding risks and looking for safe havens, further limiting GBP/AUD recovery attempts.
The Australian Dollar also received support from stronger-than-expected job market data, with unemployment coming in at 6.8%, lower than the 7.7% forecast, as well as signs Australia is recovering from the coronavirus pandemic.
Three Things to Watch Out for This Week
- Coronavirus Lockdown Developments
Concerns are rising that Britain could be headed for a second lockdown or at least see stricter restrictions. Australia, on the other hand, may see restrictions eased if its situation continues to improve.
- PMI Projections
Australian and UK PMI projections for August will be published on Wednesday. These will give markets the clearest idea so far of how these economies are performing amid the coronavirus pandemic this month.
- Brexit Developments
With less than a month until key deadlines in UK-EU Brexit talks, potential Brexit developments will continue to prove a highly influential factor for the increasingly risk-sensitive and volatile Pound.
GBP/AUD Outlook
With this week’s economic calendar quieter, global and political factors such as the coronavirus restrictions and Brexit will likely drive movement in the Pound to Australian Dollar exchange rate.