The pound to Australian dollar has experienced a decline, after rising to fresh highs in recent weeks. The Australian dollar has been bouncing back against sterling because of improved market sentiments towards the Coronavirus and signs of recovery in the Chinese economy.
GBPAUD levels has risen as high as 2.0780, but have now fallen down to 1.9638, as sterling too comes under some pressures. With the Coronavirus still not appearing to have peaked in the UK, and wide expectations the lockdown and social distancing measures will be extended this week, the pound remains at risk of losses.
This week is limited in release of UK economic data but Thursday is the release of Australian unemployment figures. Expectations ahead for the data forecast a rise in unemployment from 5.1% to 5.5%, as the knock-on effects of the Coronavirus are felt.
China is Australia’s largest trading partner and the slowdown experienced by China and others in that region is weighing on the Australian economy. Despite this however, just lately signs that the peak has passed are encouraging a return to confidence which has helped the Australian dollar to make gains.
Will GBPAUD Levels Go Back Towards 2?
Signs that perhaps the worst of the pandemic is over for Australia and China has helped the Aussie dollar to rise against the pound. However, the potential for more shocks and surprises ahead exists. Whilst sterling is weaker since the onset of the pandemic, just lately it too has been boosted by the rise in confidence globally.
Only time will tell if this confidence is misplaced, until then the currency markets will be focusing on the latest data and news to determine what lies ahead next.
Friday is Chinese GDP which is expected to contain some big drops for the quarter figures. Growth is expected to have dropped to -6% for the year on year figure, with Q1 of this year predicted to show a 10% drop. It might be argued that such news is expected and ‘priced into’ current rates.
But with the gravity of such news, the potential for volatility definitely exists and a scenario where the market takes the news badly can be floated. With China having been experiencing such rapid growth for many years it will be interesting to see how the market takes the news of this drop, and this is a piece of data very much worth any clients tracking GBPAUD levels should be aware of.
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