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Pound Australian Dollar (GBP/AUD) Exchange Rate Falls Ahead of Thursday’s BoE Meeting

May 6, 2020 - Written by John Cameron

Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate as PM Likely to Extend Lockdown



The Pound Sterling Australian Dollar (GBP/AUD) exchange rate slumped on Wednesday, leaving the pairing trading at around AU$1.9223.

Today’s boost in risk appetite buoyed the ‘Aussie’ while Sterling remained under pressure as traders worried about the downside risks to the British currency ahead of the Bank of England’s (BoE) meeting.

Sterling was left flat despite reports revealing the country had drawn up a three-stage plan for easing the lockdown.

This comes just as the government is expected to review the current lockdown measures.

However, GBP suffered losses as it is likely the Prime Minister will extend the lockdown to help prevent a second wave of the deadly virus.

According to Derek Halpenny, MUFG strategist:

‘Another three weeks of lockdown, or close to that, is likely to be confirmed by PM Johnson on Sunday, underlining again the fact that the UK is behind the rest of Europe in this crisis.


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‘We continue to see downside risks for the pound given the severity of the COVID impact looks to be greater in the UK than elsewhere.’


Australian Dollar (AUD) Rises as Retail Sales Soar



The Australian Dollar rose today after data revealed panic buying boosted retail sales in March.

Panic buying of food and toilet rolls caused sales to jump to a record high, although the majority of the surge came from an increase of prices rather than the volume of goods.

It is likely sales have plummeted in April due to Australia’s strict social distancing rules and the closure of many businesses.

The Australian Bureau of Statistics revealed food sales jumped 24% with soup sales rising 180% and flour by 140%, while the sale of toilet rolls soared 115%.

However, this dampened GDP since most of the gain came from higher prices rather than increased volumes. This means sales adjusted for inflation rose by just 0.7% in the first quarter despite analysts hoping for an increase of around 1.7%.

’Vulnerable’ Construction Sector Sends Sterling (GBP) Lower



Meanwhile, this morning’s UK construction data revealed the PMI plummeted to a record-low due to the coronavirus pandemic.

April’s PMI plummeted from March’s already disappointing 39.3 to 8.2, a fresh low. The previous low was 27.8 in February 2009.

This was the fastest decline since the survey started over 23 years ago, dampening Sterling sentiment.

Commenting on the data, Group Director at the Chartered Institute of Procurement and Supply, Duncan Brock said:

‘April’s figures delivered more worrying news for fragile construction businesses as the effects of the coronavirus continued to ripple across supply chains, devastating all productivity in its wake. Though a fall in output was not a complete surprise, the scale and suddenness of the drop has knocked the wind out of building work in the UK.


‘More vulnerable than other sectors that make up the UK economy, construction was unable to continue in any significant capacity, as companies grappled with furloughed staff and building sites under complete shutdown.’


Pound Australian Dollar Outlook: Bank of England and Coronavirus Lockdowns in Focus



Looking ahead, the Australian Dollar (AUD) could suffer some losses against the Pound (GBP) following the release of Ai Group Services Index.

If April’s index plummets further than expected, it could dampen sentiment in the risk-sensitive ‘Aussie’.

Meanwhile, the pairing could be left flat as Sterling edges lower as traders await the Bank of England’s (BoE) monetary policy meeting.

If the BoE is overly dovish about the current situation, and Boris Johnson later announces Britain’s lockdown will be extended, the Pound Australian Dollar (GBP/AUD) exchange rate will be left largely flat.




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