GBP/AUD Exchange Rate Dips as UK Covid-19 Cases Continue to Grow

The Pound Australian Dollar exchange rate dipped this morning despite Prime Minister Boris Johnson expected to give the thumbs up for the lifting of lockdown restrictions on July 19 later today. With approximately 25,000 people proving positive for the virus for each day in the UK, however, GBP investors are remaining notably cautious.

What’s Been Happening: ‘Aussie’ Weakens in Risk-Off Trade

The Pound strengthened against the ‘Aussie’ last week as weakening risk sentiment weakened demand for the risk-sensitive Australian Dollar. 

Rising Covid-19 infections rose in key economies – including Europe and China – stoked concerns over the global economic recovery. 

In Australian economic data, last week saw the publication of the latest AiG manufacturing PMI for June, which confirmed forecasts and rose from May’s 61.8 to 63.2, buoying confidence in the nation’s manufacturing sector. 

Last week saw the new UK Health Secretary, Sajid Javid, maintain his positive view to lifting lockdown restrictions later this month. But with rising Covid-19 cases throughout England, Pound investors remained largely cautious. 

The latest UK manufacturing PMI for June was also downwardly revised to 63.4. But the outlook for the nation’s economy remained positive thanks to encouraging comments from Downing Street about the final easing of lockdown restrictions on July 19.  

Three Things to Watch Out for This Week

  1. RBA Interest Rate Decision 

The Reserve Bank of Australia (RBA) is expected to hold its cash rate at the record low of 0.1. But could dovish commentary from the bank’s Governor, Philipe Lowe, limit investor demand for the Australian Dollar? 

  1. UK Covid-19 News 

If – as is widely expected – the UK Government continues to maintain that it is on track to lifting lockdown restrictions later in July, then we could see the GBP/AUD exchange rate head higher this week. 

  1. UK GDP 

This week will see the release of the UK’s latest GDP figures, with a positive release in May potentially propelling Sterling higher. 

Pound Australian Dollar Forecast

The GBP/AUD exchange rate could head higher this week as the UK edges closer to easing lockdown restrictions on July 19. We could see growing confidence in the nation’s economy translate to a stronger Sterling.