GBP/AUD is pointing downwards in early trading on Wednesday, after recovering some of the previous losses yesterday. Currently, one British pound buys 1.9269 Australian dollars, down 0.09% as of 6:50 AM UTC. The rate has formed a perfect symmetrical triangle, which suggests it can either rally or continue the bearish stance that has been around since the beginning of the month.
GBP to AUD – Dollar stronger amid hopes coronavirus is easing
The AUD has reacted positively on consumer sentiment data and the surprising move by the Reserve Bank of New Zealand, which left the interest rate unchanged.
Earlier today, the Melbourne Institute and Westpac Bank released the Australian consumer sentiment index for February, which showed improvement amid easing threats from bushfires. However, concerns over the coronavirus persist. The indicator rose 2.3% this month, after declining by 1.8% in January. Nevertheless, the figure is still down 8% compared to the same period last year, and the 95.5 reading suggests that pessimists continue to dominate.
Matthew Hassan, a senior economist at Westpac, commented:
“The lift in sentiment this month likely reflects easing concerns around bushfires and comes despite some significant negative developments, most notably the coronavirus outbreak abroad. That said, the full impact of the outbreak is yet to be felt locally and we may see more of a drag on sentiment in the months ahead, particularly as the hit to sectors such as tourism and education start to come through.”
The economy has suffered from the virus outbreak in China since the latter is Australia’s largest trading partner and source of tourists. The good news is that there are hopes that the outbreak can be managed. President Xi Jinping promised that China would meet its economic goals and win the fight against the coronavirus, which has killed 1,115 people.
Westpac’s economic outlook index, which refers to the next 12 months, rose 5.4%, while the five-year outlook increased by 4.3%. The measure of whether it was a favorable period to buy a major household item rose 2.7%, though consumer spending in general keeps subdued.