- UK Q1 GDP -2% vs -2.5% expected
- Australia Consumer confidence +16.4% in May after dropping 17.7% in April
- Australian Unemployment Data Up Next, 8.2% rate expected
- GBP/AUD trades flat at 1.8950 at 09:15 UTC >> Real time exchange rates
The Pound Australian Dollar are well matched in early trade on Wednesday as investors digest better than forecast data from both countries.
At 09:15 UTC, GBP/AUD is trading flat at 1.8950, after closing the previous session -0.3% at this same level.
The Pound is showing resilience despite data revealing that the UK economy contracted at the fastest pace since the financial crisis in the first quarter. From January to March the UK economy contracted -2% as the coronavirus lockdown kicked in. This was better than the -2.5% forecast. On a monthly basis, the UK economy shrunk -5.8%, a horrendous figure but better than the -8% contraction analyst had pencilled in.
The dominant service sector experienced a record drop in output and economists warn that the worst is yet to come. The lockdown in the UK started 23rd March. The period April – June will see a much steeper decline, with the analysts projecting a -10% GDP contraction for that period.
The Pound remains resilient today even as economists say that the prospect of a V shaped recovery in the UK is out of the question.
The Australian Dollar was also trading on the front foot versus its peers on Wednesday following a jump in consumer confidence. The closely watched Westpac consumer confidence index rebounded in May, marking the biggest monthly gain since the survey began, almost 50 years ago.
Australia’s success in containing the coronvirus outbreak led to an easing of lockdown and social distancing measures. As a result, the Westpac sentiment gauge jumped +16.4% to 88.1 in May, recouping much of the -17.7% decline in April, which was the biggest drop since the survey started.
Consumer morale is important because when consumers are confident about their financial position, job security and the outlook in the wider economy, they spend more, boosting the economy.
Looking ahead, the Australian Dollar could come under pressure with the release of unemployment data on Thursday morning local time. Analysts are expecting to see the unemployment rate jump to 8.3% in April, up from 5.2% in March, with 575,000 jobs expected to have been lost through the lockdown period of April.
