GBP/AUD is declining in early trading on Monday. Currently, one British pound buys 2.0155 Australian dollars, down 0.35% as of 7:46 AM UTC.
Nevertheless, judging by the daily chart, GBP/AUD continues to follow an uptrend that took off at the end of July last year, when the pair was trading below 1.7600.
Both the British and Australian economies are facing unprecedented challenges amid the COVID-19 pandemic. The Australian government has tightened measures. Yesterday, the country’s Prime Minister Scott Morrison ordered that public gatherings should not exceed two people, while those over 70 must stay at home.
Australian Banking CEOs Worried About Economic Nightmare
Australia’s banking CEOs are expecting the most difficult period of their careers, as they anticipate a 10% economic contraction, “shockingly high” jobless rate, and loan losses piling up in a domino effect triggered by the new coronavirus.
Tens of thousands have already lost their jobs for now, especially those working for retailers and airlines. But the banking sector might be among the first to feel the pain.
Australia & New Zealand Banking Group (ANZ) CEO Shayne Elliott said that banks were the intensive care unit of the economy. Speaking at an event conducted online by the Australian Financial Review, she explained:
“Corporates and households will come into care and we will have this unfortunate role at some point of having to decide who comes out at the end.”
Last week, Matt Comyn, CEO of Commonwealth Bank of Australia, said that he would expect the gross domestic product (GDP) to tumble by about 5% in the first three months. This week, a 10% contraction is “a reasonable assumption,” he said at the event.
Elsewhere, National Australia Bank (NAB) CEO Ross McEwan expressed similar concerns, looking quite pessimistic about the economy. He commented:
“I think you will see very, very large GDP drops. Unemployment will also go shockingly high for a period of time.”
On Friday, NAB’s economics research team concluded that the unemployment rate could surge to 12% and stay there for months.
Despite the gloomy outlook, the Aussie manages to stay strong against the sterling, as the UK has way more coronavirus cases and deaths.