The Pound Australian Dollar exchange rate dipped this morning as markets expect UK Prime Minister Boris Johnson to delay the ending of lockdown restrictions on 21 June in England because of a surge in Covid-19 cases.
What’s Been Happening: US-China Tensions Weigh Down ‘Aussie’
The risk sensitive Australian Dollar suffered from rising tensions between Beijing and Washington last week.
Max Baucus, a former American ambassador to China, said that relations between the two world’s largest economies is ‘generally deteriorating’.
Australia’s economy is heavily reliant on trade with China, so any signs of tensions between the US and China is AUD-negative.
In Australian economic data, May’s latest AiG performance of services index rose to 61.2 and the latest National Australia Bank’s (NAB) business conditions gauge for May beat forecasts.
June’s Australia Westpac consumer confidence gauge, however, fell by -5.2%, due to concerns about the two-week lockdown in Melbourne.
GBP steadily rose against AUD last week, despite growing concerns that Prime Minister Boris Johnson would delay the final easing of lockdown measures on 21 June.
The latest UK retail sales data for May pointed to growth in the nation’s retail sector. This data was eclipsed, however, by concerns about an extended lockdown period, possibly into July.
Three Things to Watch Out for This Week
1. UK Covid-19 Lockdown Announcements
Pound investors will be paying close attention to the UK Government this week. If Prime Minister Boris Johnson extends the lockdown period beyond 21 June, then the GBP/AUD exchange rate would suffer.
2. UK Unemployment Rate
Any indications that unemployment in the UK is falling would benefit the Pound as the outlook for the nation’s economy continues to improve.
3. Reserve Bank of Australia Speech
Thursday will see a speech from the RBA’s Governor Philip Lowe. Any upbeat comments about the outlook for the Australian economy would be AUD-positive.
Pound Australian Dollar Forecast
The GBP/AUD exchange rate could fall this week if Boris Johnson confirms expectations that the UK will extend lockdown restrictions beyond 21 June. This would dampened confidence in the nation’s economic recovery and limit demand for the Pound.