The British pound is lower against the Australian dollar on Wednesday.
Australia’s Finance Minister touting his country’s success in tackling the virus added to an already strong Australian dollar.
A weak reading for UK GDP sunk Sterling while as doubts linger over the reopening of the British economy.
Pound versus Australian dollar was down by 45 pips (-0.23%) to 1.8901 as of 4pm GMT.
GBP/AUD tried and failed to regain 1.90 before falling back underneath 1.89. Yesterday the exchange rate fell -0.31%, leaving a week-to-date decline of -0.41%.
GBP: Growth data depicts deep UK recession
The pound ultimately fell against the Australian dollar again on Wednesday but held onto the multi-month lows made yesterday.
Markets were temporarily distracted by economic data from the UK today and the same may happen again tomorrow on the release of Australian unemployment data. But the big picture difference is the outlook on the pandemic.
The initial kneejerk reaction in currency markets to the UK GDP data was to send the pound higher since the data came in better than forecast, but he gains gradually ebbed away as investors baked in a deep UK recession.
First quarter GDP fell -2% compared to the previous quarter, an improvement over the -2.5% expected. Equally the monthly GDP decline in March was -5.8%, the worst on record but still better than the -8% projected by economists.
AUD: Finance Minister says Australia winning
Australian Finance Minister told CNBC television on Wednesday that “If you look at what’s happening in Australia today, I mean, we are winning the battle against the virus.” His comments contrast strongly with the United Kingdom where the daily coronavirus death count remains high and experts think the true total number of deaths is over 40,000.
The Australian unemployment rate is expected to jump to 8.3% in data released tomorrow, but if Australia can contain the virus as it has done, and reopen the economy successfully, the data could prove a low point. Today data from Westpac showed Australian consumer confidence returned in May with a reading of +16.4 in May vs -17.7 prior.
