The Pound Australian Dollar (GBP/AUD) exchange rate stumbled today, as a weakness in the US Dollar supported the risk-correlated Australian Dollar.
At the time of writing the GBP/AUD exchange rate is currently trading at around AU$1.8038.
Brexit Fallout Pushes Down Pound (GBP)
The Pound found itself struggling today as post-Brexit woes damage the UK’s trade relationships.
Figures released by Germany’s Federal Statistics Body show that German exports to the United Kingdom dropped by 29% and German imports from the United Kingdom plummeted down 56.2%.
LBBW bank economist Jens-Oliver Niklasch had a stark comment to make on the data, saying:
‘Foreign trade with Britain has collapsed.’
Furthermore, Chief Scientific Adviser Patrick Vallance’s warning to MP’s over the coronavirus pandemic caused investors to remain wary:
‘It’s all pointing in the right direction, but I think nobody can say with certainty that this is, this is finished. We’re certainly not out of the woods yet, even on this wave.’
The UK’s lockdown easing is dependent on coronavirus cases falling, meaning the UK reopening roadmap could be delayed.
Australian Dollar (AUD) Edges Higher on Back of US Dollar (USD) Weakness
The Australian Dollar found support from the US Dollar’s weakness today after comments made by US Treasury Secretary Janet Yellen yesterday pushed down USD.
US Treasury Secretary Janet Yellen spoke on Monday evening, saying that the massive proposed US stimulus package would provide enough support and resources to propel a strong economic recovery in the US.
Yellen’s comments on inflation caused a pullback in US bond yields, as she said that ‘there are tools to address that [high inflation].’
However the Australian Dollar has found any gains capped as an upbeat US economic outlook helps to limit the US Dollar’s losses.
The Australian Dollar also found support from the National Australia Bank’s index of business confidence which jumped to 16 in February 2021 pointing to the highest reading since 2010.
Pound Australian Dollar Exchange Rate Outlook: RBA Governor Lowe Speech in Focus
For Australian Dollar investors, a speech from the Reserve Bank of Australia Governor Lowe later tonight will be a key focus.
Any further optimistic commentary surrounding the recovery of the Australian economy will push the currency higher.
Furthermore, any weakness in the US Dollar could aid ‘Aussie sentiment.’
For Pound investors, coronavirus developments from the UK will continue to drive Sterling movement.
As a slowdown is coronavirus cases is reported, investors will be keeping an eye on the success of the first stage of reopening the UK economy.