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Pound Australian Dollar (GBP/AUD) Exchange Rate Steady as Markets Remain Cautious Over Rising Covid-19 Cases

July 1, 2020 - Written by John Cameron

GBP/AUD Exchange Rate Rangebound as Australian Coronavirus Cases Increase

The Pound to Australian Dollar (GBP/AUD) exchange rate held steady today, with the pairing currently trading around AU$1.79.

The Australian Dollar (AUD) remained subdued today on growing fears of a possible second spike in coronavirus cases, with America suffering from an increasing number of infection rates. As a result, markets are feeling uneasy on the prospect of another setback for the global economy.

Meanwhile, fears are rising over Australia’s own coronavirus crisis, with rates of infection increasing in Victoria. Any further clusters in Melbourne or other cities in Australia would drag down the ‘Aussie’ on fears for the future of the economy should lockdowns be strengthened.

In Australian economic news, today saw building permits fall by -16.4% in May, leaving many investors concerned for Australia’s economic recovery in the near-term.

National Australia Bank (NAB) economist Kaixin Owyong commented:

‘The large fall reflects the sharp decline in housing market activity in April due to lockdown restrictions, where approvals lag housing market activity as it takes weeks for a building permit to be approved once lodged.’

Pound (GBP) Steady Despite Concerns Over a No-Deal Post-Brexit

The Pound (GBP) held steady today despite warnings from the rating agency S&P that the UK could be facing a ‘perfect storm’ economically from the coronavirus crisis and a possible no-deal post-Brexit.

The S&P commented:

‘A second, bigger wave of (coronavirus) infections in autumn, then followed by a switch to WTO trade rules in January would be a perfect storm.’

Meanwhile, concerns over UK-EU trade negotiations are weighing on Sterling today, with no further signs of the two powers coming to any consensus on a possible post-Brexit trade deal.

Today also saw the German Chancellor, Angela Merkel, warn that the European Union must prepare for a possible no-deal Brexit. This follows Prime Minister Boris Johnson’s vow that the UK would walk away at the end of the year.

As a result, Sterling traders are remaining cautious as the outlook for the British economy continues to look uncertain.

GBP/AUD Outlook: Could Improving UK Consumer Sentiment Boost Sterling?

Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of June’s AiG Performance of Construction figures. Any signs of improvement would prove AUD-positive.

Tomorrow will also see the release of Australia’s trade balance figures for May. If there’s any indication of improving export data, then we could see the Australian Dollar benefit from renewed hopes for the economy.

Pound (GBP) traders will be awaiting tomorrow’s release of the UK GfK Consumer Confidence data for June. Any signs of improvement in Britian’s consumer morale could see the GBP/AUD exchange rate edge higher.

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