Pound to Australian Dollar Recovery Limited as ‘Aussie’ Continues to Find Support

The Pound to Australian Dollar exchange rate saw mixed movement this morning. Sterling advanced on optimistic comments from the Bank of England (BoE). However, GBP/AUD remained under pressure as the Reserve Bank of Australia’s (RBA) latest comments kept the Australian Dollar strong too. 

Last Week: Coronavirus Jitters Hit Sterling despite Fading Market Risk-Sentiment 

As fears of a ‘second wave’ of coronavirus infections rise, investors have become less willing to take risks. This weighed on the Australian Dollar’s appeal last week. 

However, while the Australian Dollar was weaker, GBP/AUD still tumbled throughout the week. 

The Pound was hit lower by concerns that the Bank of England (BoE) would not be willing to do whatever it took to protect Britain’s economy from the impact of the coronavirus pandemic. 

Friday’s UK public borrowing figures also concerned investors, keeping GBP/AUD near weekly lows before markets closed. 

Three Things to Watch For This Week 

  1. PMI Projections 

Both Australian and UK PMI projections for June will be published tomorrow. These will give investors a better idea of how Australia and Britain’s economies are performing amid the coronavirus pandemic. 

  1. Central Bank Comments 

Signals from the Bank of England (BoE) and Reserve Bank of Australia (RBA) have been big influences on GBP/AUD over the past week. Fresh comments or clarifications will remain highly influential. 

  1. Coronavirus Developments 

The coronavirus pandemic could see a ‘second wave’ of infections soon. If second wave fears worsen, investors may be less willing to take risks and the Australian Dollar could face further pressure. 

GBP/AUD Outlook 

GBP/AUD remains weak despite market risk-sentiment fading. However, unless Britain’s coronavirus outlook improves, investors may continue to see little reason to buy the pair. 

Josh Jeffery

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