- RBA Governor Dr Philip Lowe gave an upbeat speech on the outlook of the Australian recovery boosting the Australian Dollar (AUD)
- Service sector & manufacturing PMI expected to show a mixed bag
- Pound (GBP) trades broadly higher versus major peers on easing lockdown measures
- Pound Australian Dollar exchange rate trades -2.5% in June
The Australian Dollar is extending gains versus the Pound as the new week begins. The Aussie Dollar rallied 1% versus Sterling across the previous week, settling on Friday at 1.8083.
At 08:15 UTC, GBP/AUD is trading -0.2% at 1.8050 following encouraging comments from Reserve Bank of Australia’s Governor Dr Philip Lowe.
Dr Philip Lowe stated, in a conference on Monday, that he thinks that it is unlikely that Australian interest rates will stay low at the current level for years. He also said that he didn’t consider the recent appreciation in the Aussie Dollar as a problem.
In his upbeat speech Dr Lowe pointed to better health and economic outcomes from the coronavirus crisis and strong commodity prices mean that the downturn in Australia is not expected to be as severe as initially feared.
Australia is considered one of the world’s top coronavirus success stories in terms of bringing the spread of the virus quickly under control and the economy rebounding.
Investors will now look ahead to Commonwealth Bank service sector and manufacturing PMI figures for June. Analysts are expecting activity in the manufacturing sector to contract at a much slower pace, ticking up to 49.3, from 44. The level 50 separates expansion from contraction. The service sector is expected to remain deep in contraction at 25.7.
The Pound is trading higher versus most of its major peers, although not the Australian Dollar. The Pound is being support by reopening optimism. Prime Minister Boris Johnson is expected to reduce the two-meter rule to just one meter in an attempt to prevent systematic damage to the hospitality industry as bars, pubs and restaurants start to reopen in the coming weeks. The move will also mean that more people are allowed inside a shop at any one time: again, good news for the economy.
On the data front investors could turn their attention towards the Confederation of British Industry’s industrial trends report. Tomorrow’s service sector and manufacturing PMI reports will also move into focus.
