- Pound (GBP) advances on Chancellor’s spending plans even as high street footfall numbers decline
- Brexit continues to cap gains in the Pound (GBP) as optimism surrounding an outline deal this month fades
- Australian Dollar (AUD) under pressure as border restrictions are put in place to control coronavirus
- Risk off trading in the broader financial markets is weighing on riskier AUD
The Pound Australian Dollar exchange rate is edging higher for a fourth consecutive day. At 08:15 UTC, GBP/AUD trades +0.1% at 1.8115 after hitting a 3-week high in the Asian session. The pair is on track to gain 0.7% across the week.
The Pound has extended gains after the Chancellor Rishi Sunak announced a £30 billion spending plan to lift the coronavirus battered economy out of its deepest recession for three centuries. The move comes as data reveals the sluggish pace of the economic recovery.
According to data from the British Retail Consortium, consumers are returning to the British High Street at a slow rate. Footfall is still down 63% compared to the same month last year, despite all non-essential shops opening three weeks ago. This is bad news for the UK economy which is so dependent on the consumer.
Gains in the Pound are capped as Brexit uncertainties continue to linger. Talks this week have made little progress, dashing the British government’s hopes of having an outline deal ready by the end of July.
The risk sensitive Australian Dollar is trending lower as fears remain over the second wave of coronavirus in Australia. The Prime Minister Scott Morrison said that hey will reduce the number of inbound resident arrivals by about half in a bid to contain the spread of coronavirus, which has seen Melbourne go back into lockdown. The Melbourne area reported 288 new cases on Friday.
The broader mood in the market was unsupportive of the Aussie Dollar. Fears over rising coronavirus in the US also dragged on sentiment. As the number of new daily cases reached 60,000, investors fear that the economic recovery will be under mined.