GBP/AUD is confidently advancing in early trading on Friday, with bulls finally taking control over the pair after four consecutive sessions in red, during which the quotation dropped by about 2.60%. Currently, one British pound buys 1.9280 Australian dollars, up 0.38% as of 6:40 AM UTC.
While the fears of the coronavirus outbreak have eased, the measures to stop the epidemic might cut 0.2 percentage points of Australia’s gross domestic product (GDP) growth in the current quarter, according to the Reserve Bank of Australia (RBA). The central bank concluded that the impact on the economy would be greater than the SARS outbreak in 2003. The tourism and education sectors have suffered the most, with China – where the virus outbreak started – being Australia’s largest source of tourists.
So far, the new strain of a coronavirus has killed 640 people, mostly in China and specifically in the city of Wuhan, where it originated at the end of last year.
RBA Governor Philip Lowe said:
“It is still too early to tell but the impact is going to be large. [If the virus] persists for an extended period, the effect on economic activity is likely to be larger than currently projected.”
The Australian economy is showing signs of slowdown even after the central bank cut the interest rate three times last year to a record low at 0.75%. The consumption is weakening and weighing on inflation, while tourist numbers also declined because of the disastrous bushfires. ANZ analysts anticipate the first GDP quarterly contraction since 2011.
Lowe’s comments on the new virus coincide with the position of Australian Prime Minister Scott Morrison, who said yesterday that the economy would take a significant hit from the epidemic. He said:
“We need to be clear about the full extent of the virus and how much further it will spread, the success of containment measures in other jurisdictions, that is not known and that’s why I think a scenario analysis is really important. And that’s being done now.”
Elsewhere, the sterling is supported by a series of positive economic updates. Recently, accountancy firm BDO said that UK retailers noted last month the biggest increase in sales since January 2014. BDO’s High Street Sales Tracker showed that sales surged by 5.7% in January.
Yesterday, the National House-Building Council (NHBC) said that housing starts in the UK rose last year to the highest since 2007.
