- Australian construction work done declines -0.7% QoQ in Q2 vs -5.8% forecast
- Risk sensitive Australian Dollar (AUD) looks to Jerome Powell’s speech tomorrow
- Pound (GBP) investors struggle to shake off Brexit trade deal concerns
- UK retail sector sees huge job cuts with more expected as the government’s job retention support is withdrawn
After gaining across the session yesterday Pound Australian Dollar (GBP/AUD) exchange rate is edging lower on Wednesday. The pair settled +0.2% at 1.8274 on Tuesday. At 08:15 UTC, GBP/AUD trades -0.1% at 1.8262.
Whilst the softer risk tone to the wider financial markets was unsupportive of the Australian Dollar, domestic data helped buoy the Aussie.
Australian total construction work done decreased by -0.7% in the June quarter according to the Australian Bureau of Statistics. This was an improvement from the -1% decline in the first quarter and significantly better than the -5.8% decrease that analysts had pencilled in. The construction sector held up much better across the coronavirus lockdown period than initially feared. Whilst this is not a high impacting data release it helps paint a more upbeat picture for the Australian economy.
Attention will now turn towards the central bankers’ Jackson Hole symposium, which starts tomorrow. The Fed’s Jerome Powell will be the key speaker to drive market sentiment. Investors are waiting for hints as to where US monetary policy will be heading in the coming months. This will be important for the risk sensitive Australian Dollar.
With nothing on the UK economic calendar to distract Pound investors, Brexit deadlock concerns continue to linger. Encouraging remarks from the newly elected Irish Prime Minister Michael Martin that the two sides were in the landing zone of a deal were shrugged off. Instead investors focusing on EU chief negotiator Michel Barnier’s advise other EU states to be “cold-bloodied” with Britain.
Adding to the downbeat mood towards Pound are concerns surrounding the UK labour market. A report from the Confederation of British Industry (CBI) revealed that jobs in the retail sector were being cut at the fastest pace since the 2008/9 financial crisis. As the government withdraws from the furlough scheme between now and October, the impact of the coronavirus crisis on the labour market is only going to get worse.
