Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Rises on Weak Aussie Confidence
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate jumped by around 0.5%, leaving the pairing trading at around AU$ 1.9924.
The Australian dollar remained on the back foot today after data revealed business confidence continued to decline in February.
National Australia Bank (NAB) showed that business confidence fell by -4 in February, the lowest since July 2013.
Coronavirus played a role in declining confidence as the survey included a special question asking firms whether the virus has had an impact on business. Around 50% of respondents said the outbreak has had some effect.
Commenting on the data, NAB Group Chief Economist, Alan Oster stated:
‘It is very possible this number will rise as the spread of the virus continues – this would most likely result in a further deterioration in confidence and eventually reported business conditions.’
The outbreak of coronavirus has weighed on Australia’s tourism and education sectors, and the country’s Treasury has predicted GDP will slump by -0.5% between January and March.
Added to this, economists are predicting a recession and expect growth to contract in the first six months of 2020.
Sterling (GBP) Rises as Markets Stabilise after ‘Black Monday’
The Pound was able make gains against the ‘Aussie’ today as markets began to stabilise after yesterday’s chaotic ‘Black Monday’.
Investors were hopeful that central bank policymakers would introduce co-ordinated stimulus to help with the economic impact of coronavirus outbreak.
However, sentiment was damped as the Italian government extended its emergency lockdown nationwide after the number of cases rose beyond 9,000 and the death toll reached 463.
Added to this, despite the stabilisation that caused oil prices to rise by 10% today, many analysts argued this does not mean the current crisis is over.
Commenting on this, Neil Wilson from Markets.com noted:
‘European stock markets looked to recover some ground early on Tuesday on hopes of a round of stimulus measures as the market tried to rally the troops after the rout of Black Monday.
‘Investors are licking wounds and there is a stabilisation of the rout, but this looks like a short-term bounce on oversold levels, not a meaningful turn.
‘It smells like a dead cat. The stimulus is coming, but the situation on the ground gets worse. It seems comments from Donald Trump, and overnight some emollient tones from the Japanese authorities, are helping.’
Pound Australian Dollar Outlook: Aussie Consumer Confidence in Focus
Looking ahead, the Australian Dollar (AUD) could extend its losses against the Pound (GBP) following the release of Aussie confidence data.
If Westpac reveals consumer confidence slumped in March as coronavirus fears increase, the ‘Aussie’ will slide.
Meanwhile, UK economic growth data could provide Sterling with a slight upswing of support.
If the economy expands more than expected in January, showing growth picked up after December’s general election, the Pound Australian Dollar (GBP/AUD) exchange rate will rise.
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TAGS: Pound Australian Dollar Forecasts