- Australian Dollar (AUD) under pressure as investors dump risker assets and currencies
- Fears grow of rising covid cases derailing economic recovery
- Pound (GBP) solid ahead of Chancellor’s winter economic plan
- Expected to announce job support programme
The Pound Australian Dollar (GBP/AUD) exchange rate is building on gains for a fourth consecutive session on Thursday. The pair settled on Wednesday +1.25% at 1.7971, just 20 pips off the high of the day. At 08:15 UTC, GBP/AUD trades +0.5% at a two-week high of 1.8068.
The Pound charged northwards in the previous session and remains well supported today as British Chancellor Rishi Sunak is due to throw a lifeline to the UK economy. The Chancellor is expected to announce new plans to support jobs today as concerns have been building over a sudden surge in unemployment when the current jobs retention scheme comes to an end on 31 October.
Rishi Sunak has ruled out an extension of the furlough scheme. However, the rising number of covid cases and tightening restrictions has meant that he has drawn up a Winter economic plan to support jobs and businesses through the challenging months to come.
The centre piece to the package is expected to be a wage support scheme similar to that in Germany. However, the multi billion-pound package will likely include further VAT cuts and the extension of emergency loan schemes for struggling businesses.
There is no high impacting UK data today. All eyes will be on the Chancellor around midday UTC, when he speaks in Parliament.
The risk sensitive Australian Dollar extends losses lower as risk aversion dominates trading in the financial markets. Fears that rising coronavirus numbers are threatening the global economic recovery have hit risk sentiment hard. Investors are selling out of perceived riskier currencies, such s as the Aussie Dollar and also out of riskier assets such as stocks. Stock markets across the globe are tumbling.
Whilst there is no Australian macros data to be released today, investors are still digesting the huge, unexpected decline in retail sales, -4.2% month on month, recorded earlier in the week.