Pound to Australian Dollar Exchange Rate Up on Delayed Reaction to UK Fiscal Stimulus
Updated 16:32 BST 09/07/2020:
Despite the Pound (GBP) not seeing much reaction to UK fiscal stimulus news yesterday, it helped the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate to climb today.
Analysts speculated that the Pound saw a delayed reaction to UK Chancellor Rishi Sunak’s Summer Statement today.
While the announced plans were not shocking, some analysts noted that Britain’s outlook would be better amid this stimulus if not for Brexit uncertainty.
The Australian Dollar (AUD) remained fairly unappealing throughout the day. The lockdown in the State of Victoria continues to dampen hopes for Australia’s economic recovery.
(Published 10:19 BST 09/07/2020)
Pound to Australian Dollar Exchange Rate Trending Higher despite Lack of Sterling Support
Despite yesterday’s UK fiscal policy news not having much impact on the Sterling (GBP) outlook, the Pound to Australian Dollar (GBP/AUD) exchange rate is advancing today. The pair is once again testing near weekly highs, due partially to pressure on the ‘Aussie’.
Following last week’s more narrow and mixed movement, GBP/AUD is more bullish this week. GBP/AUD opened this week at the interbank level of 1.79. After a brief dip to near 2020 lows, GBP/AUD rebounded and touched on a fortnight high of 1.81.
Yesterday’s movement was mixed, but GBP/AUD has sustained most of those gains. GBP/AUD is trending just below those highs, in the region of 1.80, at the time of writing.
The Pound to Australian Dollar exchange rate’s strength may be limited due to a lack of drive in Sterling. However, if the ‘Aussie’ outlook worsens, more gains may be ahead.
Pound (GBP) Exchange Rates Up despite Fears of UK Job Losses
Yesterday saw UK Chancellor Rishi Sunak announce fresh fiscal stimulus for Britain’s economy. In a supplementary Summer Statement budget, he gave more details on how the UK government planned to recover from the coronavirus pandemic.
However, the announcements were perceived as having little impact on Britain’s economic outlook. In fact, some economists have criticised the government of not doing enough to protect employees who could lose jobs as the nation’s furlough process is unravelled.
According to Garry Young, Deputy Director at the National Institute for Economic and Social Research (NIESR), said:
‘The new measures look to be badly timed and could precipitate a rapid increase in unemployment.
The incentives offered to employers look too small to be effective. Many employers have been topping up the pay of furloughed workers and are expected to bear more of the cost of the scheme from next month. They will be reluctant to do this now they know that the scheme won’t be extended.’
Australian Dollar (AUD) Seeing Greater Pressure amid Victoria Lockdown
The Australian Dollar (AUD) was one of the currencies to benefit most from market risk sentiment and economic recovery hopes in recent months.
This was because of optimism over how Australia had handled the coronavirus pandemic.
However, as fears of a ‘second wave’ rise globally, Australia’s State of Victoria has seen a fresh outbreak of the virus. It has forced Australian officials to enforce a new lockdown on the area.
This has weighed on the Australian Dollar’s appeal and is making it easier for GBP/AUD to trend near weekly highs.
On top of this, the Australian Dollar is also being weighed by fresh tension between Australia and China.
Australia’s government has announced measures to help Hong Kong residents with Australian citizenship in response to controversial new laws announced in Hong Kong. China’s government has criticised Australia’s government this morning as a result.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Focused on Political Developments
With most of this week’s economic data having been published, the Pound to Australian Dollar (GBP/AUD) exchange rate will again turn to underlying and ongoing factors.
Markets will continue to closely watch the coronavirus situations in Britain and Australia. This may only intensify if a ‘second wave’ of infections becomes more likely.
If Australia’s situation worsens and lockdown continues, investors will become more anxious about the Australian economy’s chances to rebound.
As for the Pound (GBP) continued reaction to UK fiscal policy and coronavirus developments could be influential.
However, Pound to Australian Dollar (GBP/AUD) exchange rate investors may also increasingly react to Brexit developments over the coming weeks as well.