Pound to Australian Dollar Exchange Rate Slumps as Market Sentiment Improves
Updated 16:04 BST 06/04/2020:
The Pound’s (GBP) movement remained mixed today. However, as the Australian Dollar (AUD) ultimately saw a surge in demand the Pound to Australian Dollar (GBP/AUD) exchange rate tumbled.
GBP/AUD lost over two cents today alone. Since opening today at the interbank level of 2.04, GBP/AUD has slumped back down to the level of 2.01.
At the time of writing, GBP/AUD is trending below last week’s opening levels after shedding all of last week’s gains. This is due to signs of the coronavirus pandemic slowing, which is bolstering market sentiment and riskier currencies like AUD.
If there are more concrete signs of slowing, the Australian Dollar could see further gains. However, if the Reserve Bank of Australia (RBA) is more cautious than expected tomorrow, GBP/AUD could climb again.
(Originally published 09:35 BST 06/04/2020)
Pound to Australian Dollar Exchange Rate Slips Back from Multi-Year-Highs
Market risk-sentiment has improved a little this week so far, knocking the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate back down from its best levels. The Pound (GBP) has been unable to benefit amid domestic uncertainties.
Risk-aversion has persisted in markets lately. Last week, riskier assets remained unappealing and GBP/AUD climbed over two cents as a result. GBP/AUD ended last week in the interbank region of 2.04, not far below its best levels since the 2016 Brexit vote.
However, since the weekend GBP/AUD has quickly tumbled again. GBP/AUD is already a cent lower and the pair trends in the interbank region of 2.02 at the time of writing. The pair is still over half a cent above last week’s opening levels.
While the Australian Dollar (AUD) benefits from today’s slightly more optimistic market mood, the Pound is under pressure on domestic coronavirus jitters.
Pound (GBP) Exchange Rates Pressured as Boris Johnson Hospitalised
Pound (GBP) investors panicked slightly when markets opened on Monday. Markets reacted to news that UK Prime Minister Boris Johnson had been admitted to hospital for tests over his coronavirus symptoms.
Johnson was previously tested positive for coronavirus. This has made markets anxious his health and its potential impact on Britain’s economy.
According to Masafumi Yamamoto, Chief Currency Strategist at Mizuho Securities:
‘When a head of state or government is stricken like this, it will cause concern for holders of Sterling and Sterling assets,’
However, reports have since emerged that the Prime Minister is doing well, which has calmed market panic slightly. Robert Jenrick, UK Housing Minister, said:
‘This isn’t an emergency admission and so I certainly expect that he’ll be back at Number 10 shortly.’
Australian Dollar (AUD) Exchange Rates Boosted amid Slowing Coronavirus Cases
Signs that global lockdown efforts may be helping to slow the spread and impact of the coronavirus teased headlines today.
Reports of slowing death rates in France, Italy and Korea made moods a little most optimistic when markets opened this morning.
As the Australian Dollar is commonly correlated to risk and trade and has been hit hard by the coronavirus pandemic, today’s news gave it some fresh support.
Analysts remain highly uncertain over whether there is any hope of economic normalcy any time soon however. According to a note from Economists at Deutsche Bank:
‘Overall global new case growth and fatalities are slowing but are they slowing quickly enough to work out when economies can reopen?’
Still, the Australian Dollar’s potential for gains is slightly limited. As commodity prices weaken again today, investors are hesitant to buy into risk-correlated assets too much.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Could Steady if UK Outlook Improves
The Pound (GBP) is under pressure due to concerns over the coronavirus pandemic’s impact in Britain. As a result, if the domestic coronavirus outlook improves at all, the Pound could see some stronger support.
Sterling is likely to trend a little more strongly if UK Prime Minister Boris Johnson smoothly returns from hospital as expected.
This could help Sterling to recover some losses, but market risk-sentiment will remain a focus as well.
If the global coronavirus situation takes another turn for the worse, market risk-aversion could worsen and the Pound could see more gains against the relatively risky Australian Dollar (AUD).
Tomorrow’s Reserve Bank of Australia (RBA) policy decision could of course be highly influential as well.
If the RBA takes an unexpected shift regarding Australian monetary policy, the Pound to Australian Dollar (GBP/AUD) exchange rate is likely to see a shift in movement as well.