August 28, 2020 - Written by John Cameron
STORY LINK Pound Australian Dollar (GBP/AUD) Exchange Rate Flat as Victoria’s New Coronavirus Cases Ease
Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Muted as Australia Battles Rise in Coronavirus Cases
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate remained flat on Friday morning, leaving the pairing trading at around AU$1.8159.
The ‘Aussie’ struggled to make gains against the Pound as the country continued to battle the coronavirus pandemic.
Although, the epicentre of the latest coronavirus outbreak, Victoria said it soon expects new daily cases will soon be in the double-digits as the strict lockdown helps slow the spread of the virus.
Victoria state reported a total of 113 new cases over the past 24 hours, unchanged from a day earlier. Although this was far below the one-day record of 725 cases that were reported at the start of the month.
Authorities noted the cases are likely to fall below 100 by the weekend, which would be around four-weeks into the six-week lockdown in the state capital, Melbourne.
Speaking to reporters, Victoria state Chief Health Officer Brett Sutton said:
‘It’s not gotten below 100 (per day) yet, I do expect that to happen, if not over the weekend, then by next week. It is helpful from a psychological point of view.’
Although, Australia’s most populous state, New South Wales reported 13 new cases, making this the largest one-day rise since 13 August.
Sterling (GBP) Flat as UK Sees ‘Gradual’ Improvement in Economic Optimism
The Pound remained flat against the Australian Dollar after data revealed that while business confidence has increased, it remained far below its usual levels.
The economy struggled to cope with social distancing while employers were preparing to cut jobs.
Lloyds Bank’s business barometer jumped to -14, the largest monthly increase in three years as optimism about trading prospects and the economy showed similar improvements.
Although, Sterling struggled to make gains against many currencies as a Lloyds Bank economist, Hann-Ju Ho noted this combined with the worst GDP contraction on record in Q2 meant the shape of any recovery was uncertain.
Commenting on this, he noted:
‘Nevertheless, it is encouraging to see gradual improvements in trading prospects and economic optimism, albeit from a low base.’
The latest PMIs published last week offered some support and suggested the recovery was gathering pace.
Although, some economists noted the bounce-back may prove short-lived as markets brace for the inevitable jump in unemployment as the government’s furlough scheme draws to a close in October.
Pound Australian Dollar Outlook: Key Speech from BoE’s Bailey in Focus
Looking ahead to this afternoon, the Pound (GBP) could slide against the Australian Dollar (AUD) following a key speech from the Bank of England’s (BoE) Governor.
Bailey’s comments will be scrutinized today especially after Thursday’s speech from Federal Reserve chair, Jerome Powell said the United States would adopt a 2% inflation target over time.
Although, there are doubts about whether the Fed will be able to boost inflation, as the bank has not hit its target since 2012.
If Governor Andrew Bailey is overly dovish about the rebound in activity, and hints that the bank is likely to send rates into negative territory, Sterling sentiment will slump. This will send the Pound Australian Dollar (GBP/AUD) exchange rate lower at the end of this week’s session.
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