Although we have seen a slight re-balancing on AUDGBP exchange rates since the end of last week, where lows of 0.54 were recorded, it seems there could be room for further volatility for the pairing as the week goes on. During yesterday’s trading, the pound may have been supported by the positive figures released within the retail sector. Near 7% jumps in customer footfall were registered across some parts of the UK suggesting that consumer confidence is returning faster than man analysts had expected. Though these levels remain far below to those registered throughout 2019, the markets might take this as a slight glimmer of hope. I you have a currency requirement involving the pound this is a trend to monitor. It will be interesting to see if this is brought up in Bank of England (BoE) Governor Bailey’s speech on Friday. A lot can happen across a trading week however if further signals come to the surface in the meantime, we might end up seeing a change in stance when it comes to the Bank of England’s monetary policy position. The BoE has already committed an unprecedented amount of monetary stimulus throughout 2020, so investor’s might be looking for clues as to which segments of the economy will benefit the most and therefore have the quickest recovery in the second half of this year. If you have an AUDGBP requirement in near future it might be worth reaching out to your account manager to discuss your options.
How might the Australian dollar fair against the euro and the dollar?
There have been very few shifts on the AUDEUR pairing throughout the summer, reflecting the ongoing balancing act across the currency markets. Investors might be trying to get a gauge of segments of the global economy. Working out which one will recover the quickest or indeed suffer the least from this pandemic seems to be the game of choice. This morning’s potentially pivotal Gross Domestic Product (GDP) data from Germany did very little to shake the pairing out of it’s mid 0.60 ranges. It was hoped the considerable pick up in activity levels from Europe’s powerhouse nation might draw further appetite for the single currency but once again it seems the markets a reluctant to commit any further until the wider variables become clearer.
However, a main driver within the currency markets will continue to be the US elections. President Trump has already started to cast doubt over the current system insisting it can be easily manipulated in it’s current state. It will be interesting to see how this story develops throughout this week. We have already seen the Australian dollar benefit from the uncertainty over in the states, topping 0.72 on interbank rates, marking some of the best levels seen on the AUDUSD pairing since February 2019.
Will the Lockdowns in Australia be Relaxed in the Coming Weeks?
The faceoff between the Australian government and business leaders looks set to continue this week after daily infection rates across the country hit record monthly lows once again. Throughout the back end of last week, major businesses in Australia took to the press to but more pressure on the government to relax the various intercountry boarders that were reinstated amid fears of second COVID wave. Now that new cases seem to dropping once more, the public eye has turned to the potential cost these borders are having on the Australian economy. Qantas Airways confirmed they have been running at 20% of capacity and the internal boarders where only adding to the many anchors that is preventing the multinational from kickstarting it’s recovery.
Prime Minister Scott Morrison is said to have reached out individually to state leaders to highlight the situation that has been forced on Australia’s leading companies and small firms alike so it will be interesting to see if this story gains more traction as the week goes on. Business confidence in Australia has suffered greatly throughout the pandemic but a change in stance here could provide a boost to moral and drastically change the outlook in the not too distant future. Construction has been one of the more stable industries within the Australian economy and might prove to be the most sensitive to change in policy. The lifting of internal borders might accelerate investment into infrastructure across the bloc. The Australian government has insisted it intends to use the construction sector as a mechanism to provide much needed jobs in areas that have struggled the most. Wednesday morning’s Construction work reading for the second quarter of this year could hold some weight with the markets then as investors might try to gauge how quickly the Australian economy might be able to recover.
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