Pound Australian Dollar Exchange Rate Edges Higher as Chinese Tech Selloff Unsettles Market Mood

UPDATE: The Pound Australian Dollar (GBP/AUD) exchange rate remained strong this afternoon as risk-off mood as increased, limiting demand for the ‘Aussie’. The United States – the world’s largest economy – is currently in a race against the Delta Covid-19 variant as cases rise in half of its states. The pairing is currently fluctuating around AU$1.85.

Andy Slavitt, a former senior adviser to Joe Biden’s Covid Response Team, warned:

‘We should think about the Delta variant as the 2020 version of Covid-19 on steroids. It’s twice as infectious. Fortunately, unlike 2020, we actually have a tool that stops the Delta variant in its tracks: It’s called vaccine.’

Today also saw growth worries begin to haunt global markets with US jobless claims rising. As a result, demand for the risk-sensitive ‘Aussie’ has continued to slide throughout today’s session.

GBP/AUD Exchange Rate Rises as Risk Sentiment Sours

The Pound Australian Dollar exchange rate rose by 0.4% as risk-sentiment soured today, diminishing demand for the risk-sensitive ‘Aussie’. The pairing is currently trading around AU$1.85.

China’s recent crackdown on tech companies has also dampened risk sentiment today. Beijing’s cracking down on the fast growing market has risen concerns over the possibly fading economic rebound for the world’s second-largest economy.

Associated press explains:

‘Companies including internet giants Alibaba and Tencent were fined Wednesday by anti-monopoly regulators in a new move to tighten control over their fast-developing industries.

‘In 22 cases, companies were fined 500,000 yuan ($75,000) each for actions including acquiring stakes in other companies that might improperly increase their market power, the State Administration for Market Regulation announced. It said violators include six companies owned by Alibaba Group, five by Tencent Holding and two by retailer Suning.com.’

With China being Australia’s largest trading partner, tensions from Beijing’s tech selloff has caused concern that this could bode souring relations between the two countries going forward.

The Reserve Bank of Australia’s (RBA) Governor, Philip Lowe, announced that the bank would scale back government bond purchases from September.

Lowe was positive about Australia’s economic progress, however, saying that the scaling back was a ‘a modest scaling back and it’s reflecting the progress that we’ve made.’

Pound (GBP) Exchange Rate Rises as Hopes Grow for UK Economic Outlook

The Pound (GBP) rose against the ‘Aussie’ today as UK markets are cautiously optimistic about the easing of lockdown measures on July 19. With lockdown measures being irreversibly lifting, GBP traders are more confident about the nation’s economic recovery going forward.

Concerns are growing over UK unemployment, however, with levels of joblessness rising to its highest level since 1997, according to Recruitment and Employment Confederation (REC).

Claire Warnes, the head of education, skills and productivity at KPMG UK, commented:

‘We need action from businesses and government to reskill and upskill furloughed and prospective workers now more than ever, as the increasing skills gap in the workforce has the potential to slow the UK’s economic recovery.’

In addition to concerns over joblessness, a rising number of daily Covid-19 infection rates in the UK has also caused concern for the nation’s economic outlook.

UK hospitalisations have also risen by 717 compared to last week to 2,446, while daily deaths are up by 19 compared to last week, with the current reading at 33.

GBP/AUD Exchange Rate Forecast: UK GDP Data in Focus

Pound (GBP) traders will be looking ahead to tomorrow’s release of the latest UK GDP data for May.

Any signs of improvement in the outlook for the UK economy would see the GBP/AUD exchange rate head higher.

Tomorrow will also see the release of May’s industrial and manufacturing production figure. Could an uptick in factory and manufacturing data see Sterling rise?

Risk sentiment will continue to direct the Australian Dollar this week. If global risk mood improves, then we could see the ‘Aussie’ head higher.