GBP/AUD Exchange Rate Dented by ‘Overly Cautious’ UK Government
The Pound to Australian Dollar (GBP/AUD) exchange rate is on the defensive this morning as investors appear disappointed by the UK’s government’s cautious approach to lifting the lockdown.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.9551, down roughly 0.4% from this morning’s opening rate.
Pound (GBP) Weakened by Coronavirus Lockdown Concerns
The Pound (GBP) is off to a poor start this week, plunging against the Australian Dollar (AUD) and the majority of its other peers as investors raise questions over the UK’s government’s apparent reluctance to begin easing its lockdown measures.
While still not ready to resume his full duties as Prime Minister, Boris Johnson is reportedly beginning to take leadership of the coronavirus crisis once more, making it clear that he is against starting to ease lockdown measures amidst fears of a second wave of infections.
UK coronavirus live: Boris Johnson 'against lifting lockdown over second wave fears' https://t.co/10AcHf5982
— Guardian news (@guardiannews) April 20, 2020
Speaking to the Times a government source said:
‘The idea that we will be rushing to lift measures is a non-starter. If the transmission rate rises significantly we will have to do a harder lockdown again.
‘It’s a question of how comfortable you are with the virus circulating in the community. Everyone wants the rate of transmission to be below one. But the question is how much lower it should be.’
Applying additional pressure to the Pound this morning is also a report from IHS Markit suggesting UK household finances are at their weakest levels since November 2011.
Australian Dollar (AUD) Buoyed by Risk-On Mood
Meanwhile, the Australian Dollar (AUD) is enjoying some modest support this morning amidst an apparent improvement in market sentiment.
This can be partially attributed to hopes the coronavirus pandemic is beginning to peak with various countries now exploring the easing of lockdown measures.
Further buoying AUD sentiment is the news that the People’s Bank of China (PBoC) cut interest rates in an effort to support the Chinese economy after a record contraction in the first quarter due to the coronavirus.
GBP/AUD Exchange Rate Forecast: UK Employment Figures in Focus
Looking ahead, we may see the Pound to Australian Dollar (GBP/AUD) exchange rate come under further pressure on Tuesday with the publication of the UK’s latest jobs report.
While the focus would normally be on the unemployment rate and wage growth figures, February’s data is likely to look extremely out of date given everything which has happened over the past six weeks.
Instead the spotlight is likely to be on the accompanying unemployment claims from March, which are expected to have seen a significant jump after the UK government imposed its lockdown restrictions.
Meanwhile, in focus for AUD investors will be the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting.
AUD investors will be looking for more insight into the RBA’s decision to leave interest rates on hold this month and whether the bank could still introduce additional monetary easing in the future.