The Pound Australian Dollar exchange rate has dipped this morning after a range of data released from China overnight helped to bolster the Australian Dollar.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.77603 as a local lockdown warning is issued in the UK.
Pound (GBP) Falls after Local Lockdown Warning
The Pound has found itself struggling against the Australian Dollar this morning, and the warning of local lockdowns to help tackle the coronavirus did little to support Sterling.
Professor John Edmunds of the London School of Hygiene and Tropical Medicine, has suggested local lockdowns could be introduced if mass testing fails to tackle different variannts of the virus.
Speaking to UK television last night, Professor Edmunds said:
‘What we are looking at in south London is an example of what we’ll see now in the coming months, as we try our best to keep that variant out or at as low a level as we possibly can.’
‘If these mass testing events don’t work that well, and we don’t know yet, I mean we’ll have to evaluate this one very carefully, then it’s possible that we’ll have to impose some sort of local restrictions back in place.’
The prospect of local lockdowns has caused concern for investors over the UK’s economic recovery as the constant shutting and opening of the economy would cause the Pound to suffer further.
Australian Dollar (AUD) Supported by Latest Chinese Data
The Australian Dollar has seen itself heading higher this morning after the overnight data releases from Australia’s largest trading partner, China, provided a boost to the currency.
China posted a record growth recovery in Q1 of 2021 as the world’s second largest economy expanded 18.3% year-on-year.
The figure is the best year-on-year growth since 1992, when China started publishing GDP figures.
Julian Evans-Pritchard, senior china economist at Capital Economics, was cautious over China’s economic recovery saying:
‘The upshot is that with the economy already above its pre-virus trend and policy support being withdrawn, China’s post-COVID rebound is levelling off.’
‘We expect quarter-on-quarter growth to remain modest during the rest of this year as the recent boom in construction and exports unwinds, pulling activity back towards trend.’
Regardless of the cautious tone, the record growth bolstered the Australian Dollar overnight, along with a 34.2% increase in retail sales in China.
However, AUD is coming under pressure at the start of the European session due to a risk-off mood.
Pound Australian Dollar Exchange Rate Outlook: Coronavirus Developments in Focus
In absence of any notable data over the weekend the Pound movement will instead be driven by any further coronavirus developments in the coming days with investors keeping an eye on the South African variant of the virus.
Heading into next week however, the key data investors will be focused on include employment change and inflation data in the first half of the week from the UK, which could give some insight into how the economy is recovering.
For Australian Dollar traders, the global market mood will continue to drive movement in the exchange rates, as traders will look to the most recent Reserve Bank of Australia’s meeting minutes on Tuesday.