GBP/AUD has extended its decline on Tuesday. Currently, the pair is trading at 1.9956, down 0.80% as of 7:30 AM UTC.
China’s Manufacturing PMI Beat Expectations
The Aussie is supported by surprisingly positive data from China, where the new coronavirus was reported first. Earlier today, China said that its manufacturing purchasing managers index (PMI) expanded in March to 52.0, while most analysts expected a contraction. Last month, the indicator tumbled to a record low at 35.7, which reflected the lockdown measures implemented in Hubei province and the whole country. Economists expected an increase to 45 for March, but nothing close to a growth figure.
Elsewhere, the non-manufacturing PMI increased to 52.3 from February’s 29.6.
The PMI data was released shortly after China’s Ministry of Industry and Information Technology stated that the rate in the resumption of work for industrial firms was 98.6%, while the return of workers was 89.9%.
China’s is Australia’s largest trade partner and source of tourists. However, the borders are closed due to the pandemic.
Australia’s GDP to Tumble 10% in Q1, CBA CEO Says
While China’s economy might be reviving, Australia is only at the beginning of the nightmare, as the number of new cases continues to gradually increase, forcing the government to tighten its social distancing measures. Yesterday, Commonwealth Bank of Australia CEO Matt Comyn said that Australia was about to see a 10% GDP contraction in the three months to March, as the impact of the COVID-19 outbreak will be painful.
Comyn suggested that consumption has deteriorated severely in the recent weeks amid restrictions. He added:
“Probably a base case for the March quarter would be something in the order of a 10% contraction in the economy.”
Comyn’s projection is way more pessimistic than the figures he voiced last week when he anticipated a contraction of about 5%.
As for the pound, the currency couldn’t be supported by GDP data for the fourth quarter of 2019. The ONS said that the UK economy showed no growth in the three months to December, in line with analysts’ expectations. Investors hoped that Prime Minister Boris Johnson’s historic win in the election would push the economy.
