Pound to Australian Dollar Exchange Rate Struggles to Advance despite Risk-Aversion
While investors are gradually finding risk-correlated currencies less appealing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate remains under pressure. Investors are hesitant to make big moves on the Pound ahead of today’s Bank of England (BoE) policy decision.
Since markets opened this week, GBP/AUD has been trading with a downside bias. GBP/AUD opened the week at the interbank level of 1.82.
While the pair has generally avoided falls into the region of 1.81, it remains below the week’s opening levels at the time of writing.
Movement has been fairly narrow. The Australian Dollar (AUD) continues to hold its ground, despite concerning Australian jobs data.
Pound (GBP) Exchange Rates Await Bank of England (BoE) Decision
The Pound (GBP) is being weighed by numerous factors this week.
Concerns over the coronavirus pandemic’s impact on Britain’s economy have been worsened by data. Brexit concerns persist as the latest Brexit negotiations have made it seem like progress may not be likely until after summer is over.
On top of all this, markets are anxious about the upcoming Bank of England (BoE) policy decision.
Concerns persist that due to Britain’s gloomy outlook, the bank could take even more dovish measures. According to Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank, more unorthodox policy is possible:
‘With plummeting inflation, rising unemployment and lingering risks of a no-deal Brexit, the bank has room and solid reasons to move towards a more unorthodox policy. While the BoE’s near zero rates and massive asset purchases should push the consumer prices higher in the long run, inflation will probably not be a cause for concern in the foreseeable future.’
Australian Dollar (AUD) Exchange Rates Hold despite Poor Job Market Report
The Australian Dollar (AUD) continues to see fairly sturdy performance. This is despite market risk-sentiment being weaker this week.
Risk-sentiment is lingering on hopes for fresh stimulus plans from major economies, to tackle the coronavirus pandemic. This is benefitting the Australian Dollar, which has been one of the more appealing risk-correlated currencies on markets lately.
The Australian Dollar has been resilient, even despite today’s poor Australian job market data.
Australia’s key unemployment rate rose even more than expected, to a concerning 7.1%. There were also a greater number of job losses than expected.
The ‘Aussie’ may have been more resilient thanks to comments from employment site Seek. Seek said that employment may be showing signs of turning a corner from the coronavirus pandemic’s worst period.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Awaits Bank of England (BoE)
For now, the Pound to Australian Dollar (GBP/AUD) exchange rate is fluctuating below the week’s opening levels.
The Australian Dollar (AUD) may remain resilient in the coming sessions on economic hopes. Market optimism about Australia’s economy and the government’s coronavirus handling could help AUD to hold its ground.
GBP/AUD investors will be focused on the Bank of England (BoE) today though.
If the BoE ramps up quantitative easing (QE) as expected, the Pound may remain under pressure.
However, if the BoE indicates that unorthodox policy like negative rates are on the table, Sterling could be hit even lower.
On the other hand, a surprisingly optimistic tone from the bank could help the Pound to Australian Dollar (GBP/AUD) exchange rate to mount a recovery.