The Pound to Australian Dollar (GBP/AUD) exchange rate continues to trade lower with the pair currently trading around $1.7478.
Pound (GBP) Declines over National Lockdown
The Pound (GBP) remained subdued this morning after the UK’s PMI figures were revised slightly lower.
According to data published by IHS Markit, the UK’s services index hit 49.4 in December, a contraction in growth which showed little support for the Sterling.
This marks the second month of consecutive contraction in the UK’s vital service sector, after the index struck 47.6 in November, during the UK’s previous lockdown.
With the whole of England in a hard lockdown until at least mid-February there appears to be little relief for the Pound in the coming weeks.
Tim Moore, Economics Director at IHS Markit, commented:
‘”With a third national lockdown underway, service providers will be braced for a sustained period of subdued UK economic conditions and deferred client spending in the first quarter of this year.’
Australian Dollar (AUD) Bolstered on Risk Sentiment
The Australian Dollar (AUD) rallied overnight and into Wednesday morning as global risk appetite increased on the back of a hopeful Democrat victory in Georgia.
Added to this, risk sentiment has continued to rise amid growing hopes that a global Covid-19 vaccine rollout will aid economic recovery.
As a result, AUD has benefited from an increased appetite for riskier assets.
However, Australian markets are remaining largely cautious as the nation’s Covid-19 cases continue to rise in large cities.
Today also saw the release of China’s latest Services PMI for December, which fell in December to 56.3, though still a growth in the sector.
However, following a better than expected, Chinese Manufacturing PMI, AUD traders are becoming more confident that China’s economy could be on the mend.
Pound to Australian Dollar (GBP/AUD) Outlook: Trade Balance could prove AUD-positive
Pound (GBP) traders will be awaiting tomorrow’s release of the latest UK Construction PMI data for December.
Any improvement in the outlook for the UK’s construction sector would be GBP-positive.
If it looks increasingly likely that the UK’s national lockdown will be extended beyond the middle February, then Sterling would suffer.
Australian Dollar (AUD) investors will be focusing on tomorrow’s release of the Australian Trade Balance data for November.
Any indications that Australia’s exports had increased at the end of 2020 would be AUD-positive.
AUD traders will also be looking to any further US political developments.