Pound to Australian Dollar Exchange Rate Continues to Linger Near 2020 Worst
Despite market risk-aversion and news that Britain was preparing a big infrastructure plan, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate remains weak. Uncertainty over Britain’s economic outlook remains rampant.
GBP/AUD continues to fall, even after falling to new 2020 lows. Last week saw GBP/AUD tumble from the interbank level of 1.80 to 1.79. However, the pair has dipped into the region of 1.78 multiple times.
This morning, GBP/AUD touched on a new 1.78 low. It marked the worst level for the pair since August 2019. While GBP/AUD trends closer to the interbank level of 1.79 at the time of writing, its appeal is still limited.
Pound (GBP) Exchange Rates Fail to Find Support in Infrastructure News
This week, UK Prime Minister Boris Johnson is expected to announce a new infrastructure plan for Britain. Calling it a ‘New Deal’, he promised a ’Rooseveltian’ approach to spending.
However, due to uncertainties over coronavirus and Brexit, the infrastructure news has not impressed markets. Sterling (GBP) remains weak as a result.
Analysts are skeptical over how the government will pay for these plans. There is also doubt over whether they will be enough to help Britain to weather a potential no-deal Brexit.
According to Jane Foley, Head of FX Strategy at Rabobank:
‘There’s a lot of scepticism as to whether or not the Johnson government will compromise with the EU, or whether or not it will walk away and just leave trade (to) fall back on WTO (World Trade Organisation) terms from January next year,’
Australian Dollar (AUD) Exchange Rates Resilient despite Domestic Coronavirus Jitters
The Australian Dollar (AUD) has been able to hold near its best levels all year against Sterling (GBP). This is despite a lack of fresh support for AUD.
The currency is being driven higher largely by hopes of an economic rebound from the coronavirus, boosting market risk-sentiment.
Due to resilient risk-sentiment and the ‘Aussie’ being resilient overall, its investors have overlooked the latest concerns about a coronavirus outbreak in Australia.
A surprising uptick of cases in Victoria has led officials to ramp up efforts to keep the virus under control. According to Daniel Andrews, Victoria State Premier:
‘Because of the unacceptably high rates of community transmission and the unacceptably high rates of new cases,
it is incredibly important that we take some next steps to deal with this challenge right now.’
Pound to Australian Dollar (GBP/AUD) Exchange Rate Investors Await More Coronavirus Action
Amid rising concerns that a ‘second wave’ of coronavirus infections is on the way, markets are looking to see how major economies continue to deal with the virus.
Investors have been generally impressed with Australia’s handling with the virus. As a result, if Australia’s measures going forward impress as well, the Australian Dollar (AUD) is likely to see further gains.
Pound (GBP) investors are eagerly awaiting further action from the UK government on the coronavirus. UK Prime Minister Boris Johnson’s infrastructure plans for Britain will of course continue to be closely watched as well.
UK and Australia manufacturing data for June will be published tomorrow. This could cause some movement if it surprises investors.
Overall though, coronavirus developments will remain the focus for Pound to Australian Dollar (GBP/AUD) exchange rate investors in the coming sessions.