Pound Sterling Aussie Exchange Rate Falls
The Pound Sterling Australian Dollar exchange rate edged -0.4% lower in forex trading. The pairing traded at around AU$1.8019 afterward.
The Australian Dollar was able to rise against the Pound, albeit this was largely limited by renewed geopolitical tensions.
Growing tensions between China and the US weighed on risk appetite. The latest events in the tit-for-tat retaliation between the two are over access to US financial markets. This also includes territorial claims in the South China Sea and civil liberties in Hong Kong.
The Trump administration plans to abolish a 2013 agreement between US and Chinese auditing authorities. This may lead to a broader crackdown on Chinese companies listed on US stock markets.
In addition, growing COVID-19 cases in the US also weighed on risk appetite. The following statements were notes from Junichi Ishikawa, senior foreign exchange strategist at IG Securities.
The focus shifted to whether the next round of coronavirus lockdowns will be large enough to damage economic growth. The problem in Hong Kong could potentially lead to new trade friction.
Furthermore, Ishikawa said that negative developments on either front could cause stocks to adjust lower. They could cause and drive some safe-haven flows to the dollar and the yen.
However, forex news reported the aussie received some support after NAB’s business confidence index rebounded more than expected. Confidence rose from -20 to 1 last month.
Sterling (GBP) Slides with Less Rebound than Expected
The Pound suffered losses in the FX market against the aussie, after data revealed there was less rebound than expected. This was as the UK took its first step towards recovery.
Britain’s GDP rate gained 1.8% in May, as the country began to ease lockdown restrictions. This followed a record contraction of -20.3% just a month earlier.
Moreover, data revealed that in the three months to May, the UK’s economy shrank by -19.1%. In comparison to a year earlier, the economy is -24% smaller.
The pick-up in output in May more possibly reflects the partial release of pent-up demand, as restrictions began to loosen. This is as opposed to evidence of a genuine recovery. This was according to Suren Thiru, head of economics at the British Chambers of Commerce.
The economy began to pull itself out of the slump, but many continued to worry about employment in the country.
The Bank of England has warned that a large rise in unemployment is likely as temporary job measures end.
Following today’s GDP data, British Chancellor Rishi Sunak noted that today’s figures underline the scale of the challenge they face. He said he knows people are worried about the security of their jobs and incomes.
Meanwhile, the sterling fell back below the 1.25 level on Tuesday morning. This extended its sell-off from a day previous amid ongoing Brexit concerns and some weak UK economic data.
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