Pound to Australian Dollar (GBP/AUD) Exchange Rate Dips as Australian Business Confidence Suffers

May 12, 2020 - Written by John Cameron

STORY LINK Pound to Australian Dollar (GBP/AUD) Exchange Rate Dips as Australian Business Confidence Suffers

GBP/AUD Exchange Rate Sinks as Australia-China Tensions Rise

The Pound to Australian Dollar (GBP/AUD) exchange rate fell by -0.3% today despite the release of the National Australia Bank’s (NAB) business confidence report for April, which plummeted by -46. The pairing is currently trading around AU$1.89.

Martin Haese, the chief executive at Business SA, described the results as ‘catastrophic’ for South Australia’s economy.

Mr Haese added:

‘Businesses across the board felt anxiety about the immediate months ahead, with 36 per cent casting doubt over whether they could survive another three months of restrictions.’

Furthermore, tensions between Australia and China have sparked off once again after China suspends beef imports from Australia. With China being one of Australia’s largest trading partners, this has left many ‘Aussie’ traders anxious about the nation’s economy going forward.

However, the Australian Dollar (AUD) has improved due to a rising of risk sentiment, with news being welcomed that Europe’s largest economies – France and Germany – slowly easing their lockdown measures.

Pound (GBP) Sinks Despite UK Chancellors Extension of Furlough Scheme Until October

The Pound (GBP) fell today after England recorded another 350 hospital deaths from the coronavirus, taking the total up to 23,709.

However, some good news appeared in the form of Health Secretary Matt Hancock’s report that care home deaths had significantly decreased over the last weeks of April.

Today also saw Chancellor Rishi Sunak extend the furlough job retention scheme until the end of October.

As a result, Sterling traders have simultaneously welcomed the news but have also become increasingly anxious over the future of the British economy as Covid-19 continues prevent businesses running at their full capacity.

The TUC welcomed the Chancellor’s statement, saying:

‘We are pleased ministers have listened to unions and extended the job retention scheme to the autumn. This will be a big relief for millions.’

‘As the economic consequences of Covid-19 become clear, unions will keep pushing for a job guarantee scheme to make sure everyone has a decent job.’

GBP/AUD Forecast: Could the ‘Aussie’ Rise on Improving Risk Sentiment?

The Pound (GBP) investors will be looking ahead to tomorrow’s release of the first quarter’s flash UK GDP report. However, as this is expected to fall dramatically due to the coronavirus pandemic, we could see Sterling fall further.

Tomorrow will also see the release of the UK industrial production report for March. If this significantly drops, then we could see the Pound suffer.

Australian Dollar (AUD) traders will remain sensitive to developments between Australia and China. Should relations between the two powers continue to deteriorate we could see the ‘Aussie’ struggle to hold onto its gains.

The GBP/AUD exchange rate will continue to be driven by global risk sentiment, however. If larger economies continue to ease off their lockdown restrictions, then we could see the risk-sensitive Australian Dollar hold onto its gains.

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