After gaining across the previous week, the Pound is trending lower versus the Australian dollar. The Pound Australian exchange rate advanced 0.6% last week, closing on Friday at 1.9481.
At 09:15 UTC, GBP/AUD is trading -0.3% at 1.9404. This is at the lower end of the daily traded range of 1.9388 – 1.9538, an interesting move for the pair given the strong risk off sentiment which is dominating global markets.
Pound Slips As Business Confidence Tumbles
The Pound is falling on Monday after a quarterly report by Deloitte showed that Britain’s largest firms expect coronavirus to dent sales by around 20% this year. The report also revealed that these firms are gloomier than in the financial crisis, with the survey recording the largest drop in business confidence since it began in 2007.
The survey of the chief financial officers from the 100 largest UK firms showed that there is no expectation for a quick sharp bounce back in activity. The majority of CFO’s don’t expect revenues to return to pre-coronavirus crisis levels for at least 12 -15 months.
Last month government forecasters warned that in a worse case scenario economic output could fall by over 13%.
Whilst there is no high impacting UK data due to be released today, there are plenty of key events across this week which could influence movement in the Pound. US -UK trade talks begin tomorrow, Thursday is the Bank of England’s monetary policy announcement and Boris Johnson will also reveal the UK’s lockdown exit strategy this week.
Australian Dollar Advances Despite Risk Off Mood
The Australian Dollar is advancing versus the Pound despite risk aversion dominating in the financial markets amid President Trump’s efforts to pin blame for the coronavirus outbreak on China, threatening trade tariffs. Usually in times of geopolitical strain, the perceived “riskier” Australian Dollar comes under pressure.
The move higher in the Aussie comes after an impressive rally across April. The Australian dollar surged 4.5% versus the Pound on improved risk sentiment as countries across the globe turned their attention to easing lock down measures.
Looking ahead investors will focus their attention on the Reserve Bank of Australia’s monetary policy announcement. The central bank is expected to leave rates at record lows of 0.25%. RBA forecasts are set to overshadow the rate decision.
