GBP to AUD is moving sideways on Friday morning, fluctuating around 1.9600.
Currently, the GBP/AUD is trading at 1.9602, up 0.02% as of 7:00. The price gained almost 0.80% yesterday, after three consecutive bearish sessions. At the end of February, the pair updated the highest level since June 2016.
Australia’s Retailers Affected by Bushfires
The Aussie will likely continue to decline against the Pound sterling, as the Australian Bureau of Statistics (ABS) said earlier today that retailers had suffered from one of the worst fire seasons on record. Retail sales declined 0.3% in January to the equivalent of $18.27 billion. Economists surveyed by Reuters expected a flat reading, after a revised decline of 0.7% in December.
Thus, shoppers chose to stay at home even before the coronavirus outbreak started to gain importance.
All categories except food retailing showed declines in the first month of this year. Now investors fear that the impact of the virus will become even more visible in the following months.
Callam Pickering, APAC economist for job site Indeed, commented:
“Disruptions to supply-chains are likely to reduce the amount of available stock for a range of goods, while households are likely to pull back on everything but the necessities. Reduced tourism will also hurt.”
So far, Australia has confirmed 60 cases of coronavirus infections, with two people dying from the complications.
The weakening consumption doesn’t seem to recover despite three interest rate cuts by the central bank last year and one rate cut earlier this week. The Reserve Bank of Australia and the country’s Treasury are expecting the economy to contract this quarter for the first time in nine years.
Economists claim that the degree of uncertainty and fear across the local economy reached the highest point since the financial crisis, and the GDP performance is definitely reflecting this.
As for the sterling, it is backed by positive labor market data. Earlier today, the Recruitment and Employment Confederation (REC) and KPMG said in a report that the index of demand for staff rose to 57.2 last month, the highest since January last year. The surge from 54.8 in January was the biggest since July 2013.
Nevertheless, the pound faces its own challenges, as the new coronavirus killed the first patient in the UK, while the European Union accuses Britain of undermining the bloc’s unity at the trade talks.
