The Pound Australian Dollar exchange rate rose by 0.2% this morning as the outbreak of the Delta Covid-19 variant in Australia, including its capital, Sydney, have weighed on demand for the risk-sensitive ‘Aussie’. Rising cases of the coronavirus in Asia-Pacific have also dampened global risk sentiment.
What’s Been Happening: Pound Hit by Health Secretary Matt Hancock’s’ Resignation
The GBP/AUD tumbled at the end of last week after the resignation of Health Secretary Matt Hancock after he admitted he had breached the Government’s social distancing guidelines.
Former Chancellor Sajid Javid has now replaced Matt Hancock.
Javid has repeated his aim is to reopen the UK economy on 19 July, when lockdown restrictions are due to be lifted, buoying confidence in the outlook for the UK economy.
Last week also saw Sterling struggle after the Bank of England (BoE) struck a dovish tone following its interest rate decision.
Interest rates remained at 0.1% but BoE policymakers suggested that rising inflation was transitory. In addition to this, only one member of the monetary policy committee (MPC) out of eight voted for a rate rise.
In other UK economic news, the preliminary PMI data for June showed robust growth in the British economy, with the latest services and manufacturing data remaining strong.
The Australian Dollar (AUD) struggled last week after the latest preliminary Australian PMI data for June continued to expand, albeit at a slower pace.
With rising concerns over coronavirus outbreaks – including in Sydney and Victoria – AUD investors became more cautious about the outlook for the nation’s economy.
Three Things to Watch Out for This Week
- UK Covid-19 Developments
We could see Sterling head higher this week if the new Health Secretary, Sajid Javid, maintains his confidence in lifting lockdown restrictions on 19 July.
- UK GDP Data
Pound investors will monitor Wednesday’s publication of the latest GDP data for the first quarter. If the figure is revised upward, then the Pound Australian Dollar exchange rate would head higher.
- BoE Governor Bailey Speech
Andrew Bailey, the BoE’s Governor, will deliver a speech on Thursday. Could a dovish statement drag down the GBP/AUD exchange rate?
Pound Australian Dollar Forecast
The GBP/AUD exchange rate could continue to head higher this week if risk-sentiment sours over concerns of rising Covid-19 infection rates in Asia-Pacific.