GBP/AUD continues its bullish trend on Wednesday, though at a slower pace. The pair is now trading at 1.9082, up 0.11% as of 6:30 AM UTC.
Last week, the pound was under pressure after several Bank of England (BoE) policymakers, including Governor Mark Carney, hinted that they would support an interest rate cut as early as at the next meeting later this month, citing a weakening economy. Indeed, a series of disappointing economic data seemed to support the central bank’s stance. However, recent labor market data helped the sterling resist pressure from rate cut discussions. The UK government said yesterday that the number of employed people rose 208,000 in the three months to November, while economists expected an increase of 110,000.
Elsewhere, the Aussie faces massive pressure after the Melbourne Institute and Westpac Bank data showed that Australian consumer sentiment declined again in January, driven by struggles with the bushfires that killed 29 people and millions of animals. The index fell 1.8% this month compared to December, when it dropped 1.9%. In annual terms, it tumbled by 6.2%.
Westpac chief economist Bill Evans stated:
“Confidence has been further eroded by the bushfires but because the index was starting from such a modest level it was likely that the fall in confidence would be less than some may have expected.”
What’s more troubling is that the bushfires don’t go away. After several days of rains and lower temperatures, the residents of the capital city of Canberra are evacuated on Wednesday after reports that a bushfire started near the airport. Australian authorities told people to stay away from the east of Canberra.
Besides fears of returning wildfires, the Aussie is declining on concerns over the outbreak of a new and mysterious coronavirus in China. The virus has killed the sixth person in China and has spread from Wuhan to Beijing, Shanghai, and other cities. Several cases were also reported outside China, including in the US. Australia is particularly concerned as China represents the largest source of tourists, and this is especially challenging amid the Lunar New Year holiday that started this week.
