Rising GBP / AUD exchange rate on risk averse trading
The British Pound (GBP) was able to appreciate against the Australian Dollar (AUD) today as the aggressive market mood favored the British Pound over the ‘Aussie’. Exacerbating the decline in the AUD, the Australian state of Victoria has reported its highest number of Covid cases to date.
As of this writing, GBP / AUD is trading at A $ 1.8690, slightly higher from today’s opening levels.
Australian Dollar (AUD) Exchange Rates Suffer from Risk Aversion and Rise in Covid
The Australian dollar (AUD) fell against several of its peers today as investors moved away from riskier currencies due to a relatively low-risk market mood.
Concerns over Chinese real estate developer Evergrande were heightened when Fantasia Holdings Group Co became the second construction company to miss a dollar bond payment: a sign that financial distress is spreading in the real estate industry.
As Australia’s largest trading partner, uncertainty in the Chinese economy is having a particularly strong effect on Australian trade sentiment.
Wider concerns in financial markets relate to the US debt ceiling, which is at risk of being breached as the Democratic and Republican parties fail to come to an agreement on how to avoid default.
The nation’s largest lender, JPMorgan Chase & Co, has started planning scenarios of how a possible U.S. credit default would affect repo and money markets, client contracts and its capital ratios.
In the Australian state of Victoria, Covid cases topped Saturday’s total of 1,488, reaching a new all-time high at 1,763. Australia’s largest cities have been stranded for weeks as authorities try to control an epidemic of the more infectious variant of the delta.
Despite the news, the national first-dose vaccination rate has reached eighty percent in the adult population, boosting public morale; Australia has also announced that it will purchase 300,000 courses of the promising antiviral drug from Merck.
Molnupiravir will be the first oral antiviral drug for COVID-19 if it gets regulatory approval, and could halve the chances of those most at risk of dying or being hospitalized from severe illness COVID- 19.
British Pound (GBP) exchange rates climb on positive PMI data
The British Pound (GBP) trended higher against the majority of its peers today, as a strong UK services PMI boosted trade sentiment this morning. The Markit / CIPS data has been revised up from 54.6 to 55.4, reflecting a strong recovery in UK service sector activity.
About 34% of the service panel surveyed reported an increase in production in September, while only 13% reported a reduction: higher activity levels were mainly attributed to strong customer confidence and favorable business conditions. due to the end of pandemic restrictions.
Gains are limited, however, by concerns over severe supply chain constraints, with service sector companies reporting the smallest increase in new orders since March, following the winter lockdown.
Staff shortages are also responsible for a drop in orders, as the lack of candidates to fill vacant positions combines with the end of the government leave scheme aimed at restraining job growth.
Duncan Brock, group director at the Chartered Institute of Procurement and Supply, observed:
“Although job creation was sustained in September, the service sector still faced challenges in terms of skills shortages and talent shortages as competition for the right employees intensified.
GBP / AUD exchange rate forecast: will the Australian dollar gain on the services index?
During tomorrow’s session, the Aussie may find some support as the Ai Group Services Index for September is expected to hit 49.8, topping last month’s figure.
The data release is only late in the evening, however, leaving the Aussie exposed to losses for most of the session.
Meanwhile, the pound could face headwinds as the UK construction PMI for September appears to post lower than last month at 54. A drop in construction activity will likely trigger a bearish response investors.