Trump’s Covid-19 Diagnosis Prompts Pound Australian Dollar (GBP/AUD) Exchange Rate Rally
News that Donald Trump had tested positive for Covid-19 encouraged a strong rally for the Pound to Australian Dollar (GBP/AUD) exchange rate this morning.
As markets rushed to gauge this development’s impact on the upcoming presidential election a fresh bout of risk aversion saw the Australian Dollar (AUD) slide.
While the ultimate ramifications of the news have yet to be seen this introduced an additional sense of uncertainty into markets, leaving the risk-sensitive Australian Dollar exposed to selling pressure.
The underwhelming nature of August’s Australian retail sales data added to the day’s bearish trend, with sales found to have contracted -4% on the month.
With signs pointing towards renewed weakness within the Australian economy there was little in the way of support for AUD exchange rates.
Brexit Speculation Continues to Fuel GBP/AUD Exchange Rate Volatility
Speculation over the possibility of an imminent breakthrough in UK-EU trade talks helped to shore up Pound Sterling (GBP), meanwhile.
Reports that the two sides could be close to entering an intensified stage of negotiations saw demand for the Pound increase, even in the absence of a concrete agreement.
Even so, this sense of optimism proved fragile thanks to the presence of key issues that still appear unresolved.
If officials continue to make positive signals, though, this could see the GBP/AUD exchange rate extending its gains further in the days ahead.
Pound Vulnerable to Underwhelming Services PMI Performance
Support for the Pound could come under fresh pressure on Monday, however, if the finalised UK services PMI for September proves disappointing.
After the negative revision to the corresponding manufacturing reading investors are wary of the potential for a similar slowdown in the services PMI.
As long as signs point towards the UK economy losing some of its initial recovery momentum at the end of the third quarter the GBP/AUD exchange rate looks vulnerable.
Unless the service sector demonstrates greater signs of resilience in the face of lingering Covid-19 anxiety and the possibility of a fresh lockdown the mood towards the Pound looks set to sour.
Deteriorating Business Confidence Set to Weigh on Australian Dollar
Fresh weakness may be in store for the Australian Dollar, on the other hand, as forecasts point towards a decline in the latest NAB business confidence index.
Another negative reading here would add to existing doubts over the outlook of the Australian economy, suggesting that businesses are continuing to take a negative view.
Even if the index shows signs of picking up this may not be enough to shore up AUD exchange rates in the face of any lingering risk aversion.
Unless global markets find renewed cause for optimism the Australian Dollar could struggle to find any particular traction against its rivals in the near term.