GBP/AUD: Aussie Advances on Latest Coronavirus Updates

GBP/AUD is declining in early trading on Tuesday, after a relatively bullish day on Monday. Currently, one British pound buys 1.9243 Australian dollars, down 0.35% as of 6:55 AM UTC.

AUD strengthens as coronavirus infection rate slows down

The Australian dollar has strengthened along with other Asian currencies on hopes that the coronavirus outbreak in China is becoming manageable. There seems to be a slowdown in the rate of the infection, even though the death toll continues to increase. Earlier today, China reported 108 new deaths caused by the new strain of a coronavirus on Tuesday. Thus, the total number of people killed in mainland China exceeds 1,000, but the number of new cases declined.

Moh Siong Sim, a forex strategist at the Bank of Singapore, explained:

“The absolute number of cases continues to climb. That remains a worry. But where the market has taken a bit of comfort is that the rate of infection seems to have come down.”

The Aussie is increasing against the pound despite mixed Australian economic data released earlier today. National Australia Bank (NAB) said that its business conditions index had been unchanged at +3 last month. The survey’s business confidence component, which is more volatile, rose 1 point to -1, while analysts expected an increase to 0. The index of employment dropped 3 points to +1, suggesting slower jobs growth.

The Australian economy has been impacted by one of the worst fire seasons in its history and the recent coronavirus outbreak in China – Australia’s largest trade partner and source of tourists.

Alan Oster, chief economist at NAB Group, commented:

“Looking forward, businesses themselves do not anticipate a material improvement with forward orders still weak (and negative) and capacity utilisation having fluctuated around its average in recent months.”

NAB is about to publish a separate survey report focused specifically on bushfire impact.

The Aussie was supported by data released by the Australian Bureau of Statistics (ABS), which showed that home loan commitments surged in December to $19.64 billion (seasonally adjusted), up 4.4%. This is the highest measure of home loan lending since July 2018.

The housing market is supported by lower interest rates, after the Reserve Bank of Australia (RBA) cut the rate three times last year, and surging demand as a result of bushfires.

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