The Pound is trending higher versus the Australian Dollar for the fourth straight session on Tuesday, amid continued coronavirus concerns. The Pound Australian Dollar exchange rate continue to hover close to the four year high of 2.02 reached in the previous session as coronavirus fears persist.
At 15:30 UTC, GBP/AUD was trading 0.13% higher at 1.9940. This was the upper end of the day’s trading range of 1.9770 – 1.9957.
More Rate Cuts To Come in Australia?
The mood for the Australian dollar has been hit by fears that the Australian economy is headed for its first recession since 1991. A combination of the hit from China’s virus induced economic slowdown, declining confidence and domestic disruptions from the bush fires and coronavirus outbreak re expected to result in a steep slowdown in economic growth.
Australian GDP is now expected to fall 0.4% in the first three months of the year and an additional 0.3% in the second quarter of the year. This will bring an end to an impressive run of 28 ½ years of economic growth.
Fiscal and monetary stimulus could help reduce the extent of the damage. However, it won’t be sufficient to completely offset the negative impacts, according to economists. The Reserve Bank of Australia cut interest rates last week. However, market participants are expecting further cuts in April. The prospect of further rate cuts is weighing on demand of the Australian Dollar.
Pound Looks To Tomorrow’s Budget
The Pound pushed northwards versus the Australian dollar. However, it was trading broadly lower versus other major peers as business confidence in the UK tumbles. According to the Institute of Directors, business confidence in the UK has tanked since the global coronavirus outbreak. The post-election Boris Bounce in business confidence has now been completely wiped out.
Survey by the institute showed he extent of the disruption that the coronavirus has caused businesses as they restrict employee travel, events and encouraged at home working.
Investors will now look ahead to the UK Budget tomorrow where the Chancellor Rishi Sunak will attempt to boost spending and confidence to prevent the coronavirus hit becoming the start of a longer-term problem.
