- Australian Dollar (AUD) under pressure as Victoria lockdown expected to hit GDP
- Australian domestic news overshadowed upbeat market mood on US – China trade progress
- Pound (GBP) investors move past Brexit concerns
- CBI data in focus
The Pound Australian Dollar (GBP/AUD) exchange rate is attempting to push higher after trading in the red for two consecutive session. The pair settled on Monday -0.3% at 1.8237. At 07:45 UTC, GBP/AUD trades +0.1% higher at 1.8261.
The Australian Dollar is being dragged down by domestic factors despite a risk on mood in the broader market.
Growth forecasts for the Australian economy have been downgraded by economists at NAB owing to the economic impact of the second wave of coronavirus. Lockdown measures in the state of Victoria are expected to contribute towards taking 3% off Australia’s GDP.
The lockdown in Victoria came after Australia’s economy was recovering from the initial lockdown in March and April. It has hampered the economic recovery and will ultimately delay the speed at which the Reserve Bank of Australia can normalise monetary policy.
Losses in the risk sensitive Aussie Dollar are being capped by positive news flow surrounding US – Sino trade talks. US Trade Representative Robert Lighthizer and Chinese Vice Premier Liu He agreed that progress has been achieved in the Phase 1 trade deal and that progress has been made on resolving issues.
Pound investors are moving past the Brexit fears that dragged on sterling over the past two sessions. The Pound had been under pressure after the 7th round of Brexit trade talks failed to move talks forward. Should the UK and the EU fail to reach a trade deal, the UK will leave the EU at the end of the year on unfavourable World Trade Organisation rules.
There is no high impacting UK data due for release today. Instead investors could look towards Confederation of British Industry (CBI) distributive retail sales trends which are expected to increase 8% in August against a 4% increase in July. A strong reading could help push the Pound higher.