Whilst the Coronavirus crisis continues to escalate towards its peak, with almost another 1000 deaths recorded in the UK yesterday, Australia looks to be flattening the curve and the AUD has gained against GBP as a result.
Since closing their borders near the end of March, something the UK has still not done, Australia has seen a drop in infection rates, and they have also been testing at a far greater rate than the UK. In the UK it has been announced that the peak has not yet been hit and as infection rates and the death toll continue to rise, we could continue to see Gross Domestic Product (GBP) data under pressure.
Chinese Q1 GDP expected to show 10% contraction
The Aussie dollar could come under some pressure next week however, when GDP data for Q1 from China for is released. As Australia’s biggest trade partner, the economy is heavily reliant on a strong Chinese economy in order to continue to import raw materials. China was of course in lockdown many months ahead of the rest of the world and the initial expectation ahead of next week is that the economy will have shrunk Quarter on Quarter by at least 10%. If this is the case, then AUD could soften.
However, there could be some more positive news from China’s retail sales and industrial production figures for March, where the county’s lockdown measures were beginning to become less strict. Expectations are for a slight let up from the previous month’s figures, so anyone with an AUD requirement should keep a close eye on figures as they are released as they could have an immediate impact on the value of the Aussie.
UK GDP set to fall significantly in Q1
The pound weakened against AUD yesterday further after a raft of negative data sets released showed the impact that the Coronavirus lockdown is having on the economy. GDP and manufacturing data showed a drop in February’s MoM figures, which were of course before the lockdown measures began and GBP estimates for Q1 highlighted a significant drop to -4.8%.
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