GBP/AUD Exchange Rate Tempered by Coronavirus Concerns
The Pound to Australian Dollar (GBP/AUD) exchange rate has edged higher this morning, but appears to be struggling to accelerate further amidst ongoing uncertainty over the UK’s lockdown.
At the time of writing the GBP/AUD exchange rate is trading at around AU$1.7778, up almost 0.3% from this morning’s opening rate.
Pound (GBP) Tempered by Lockdown Uncertainty
The Pound (GBP) has enjoyed some modest gains against the Australian Dollar (AUD) this morning, but the pairing now appears to have hit a wall, as GBP exchange rates are tempered by domestic coronavirus concerns.
On Tuesday the UK passed the grim milestone of recording over 100,000 deaths attributed to Covid-19, with the country also struggling to keep the NHS from being overwhelmed.
Boris Johnson, said:
‘I’m deeply sorry for every life that has been lost, and, of course, as prime minister, I take full responsibility for everything the government has done. What I can tell you is that we truly did everything we could and continue to do everything that we can.’
On the other hand, the UK is well ahead of most countries in its vaccination rollout, with over 6.8 million people having received at least one dose of the vaccine and the government potentially on track for reach its target of vaccinating the 13.5 million most vulnerable by mid-February.
But the real question is when this will allow the UK to begin easing its lockdown measures, with the Pound facing pressure as it looks increasingly likely the lockdown will be extended.
Australian Dollar (AUD) Fails to Sustain Gains Following Strong CPI Figures
At the same time, the Australian Dollar (AUD) finds itself on the back foot this morning after a stronger-than-expected consumer price index provided only fleeting gains for the ‘Aussie’.
According to data published by the Australian Bureau of Statistics (ABS), domestic inflation accelerated to 0.9% in the fourth quarter of 2020, beating consensus estimates that it would hold at 0.7%.
However, while the headline CPI figures printed above expectations, suggestions that the uptick in inflation may prove short-lived quickly undermined the Australian Dollar’s attempts to rally.
Robert Carnell, Regional Head of Research, Asia-Pacific at ING, said:
‘Although higher than expected, there is no alarming inflation message embedded in these latest price figures. Alcohol and tobacco prices, rose 4.2%QoQ, but are largely a function of State taxation, not market forces.
‘We’re not ruling out that some people may have hit the bottle quite hard during the earlier lockdowns, and that may have enabled some margin expansion, but in any case, we don’t read into this a long-lasting inflationary impulse.’
The pullback in the Australian Dollar can also be attributed to the cautious tone in markets ahead of the Federal Reserve’s latest rate decision, with investors reluctant to make any aggressive bets before they hear what the US central bank has to say.
GBP/AUD Exchange Rate Forecast: Coronavirus Statistics to Remain in the Spotlight
Looking ahead, it seems safe to assume that movement in the Pound to Australian Dollar exchange rate will continue to be driven by coronavirus developments through the remainder of this week amidst the absence of any notable data releases.
In the UK the focus will remain on the vaccination rollout, where continued success could help to prop up the Pound.
Meanwhile, should the number of global cases continue to grow we may see investors shy away from the risk-sensitive ‘Aussie’.