The Australian dollar was 0.07% lower versus the pound as global markets bounced from a day of panic selling. The big news for the day was the big sell-off in crude oil prices after OPEC failed to agree over cuts to production levels. Losses were seen on other commodities such as copper, which weighed on the outlook for the Australian currency.
The AUD to GBP exchange rate was traded at 0.5020 in the European session but there is still a chance that the 0.5000 level is going to provide some support.
Markets recover from oil price shock
Global stock markets saw losses on the day of up to 8% as a crash in oil prices led to a bout of heavy selling in global exchanges. It was only the turn of the year when oil was touching $64.00 but the market has since collapsed, and yesterday’s OPEC news saw prices touch $30.00 with a loss of around 20%.
Russia and Saudi Arabia failed to agree on a cut to their production levels and this was followed by news that Saudi had then slashed the price of their oil and boosted production levels in what was seen as a retaliatory move to punish other players. The price of oil has since recovered by 10% today which has boosted stocks but there will still be repercussions for the energy sector.
U.K. budget will be a big driver of short-term movement
The economic calendar is quiet for the U.K. and Australian economies but tomorrow will Australian loans data and British manufacturing numbers for January. The big event tomorrow is the release of the U.K. government budget. This will be the first budget since Boris Johnson became Prime Minister and will bring some clarity to the U.K. currency outlook.
The new chancellor recently stated there would be “firm action” to tackle the Coronavirus outbreak and some expect an emergency package of £5 billion. The Conservative manifesto had also promised to slash business rates so this will likely be a headline, with infrastructure spending another goal. High street retailers have been struggling to match the power of their online rivals and there could be measures to level the playing field. The Coronavirus spread is still an uncertainty for the U.K. but the pound is not seeing weakness from it.
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