Pound Australian Dollar (GBP/AUD) Exchange Rate Consolidates as Monday’s European Session Draws to a Close

GBP/AUD Exchange Rate Closes Session Akin to Opening Levels

(Updated 16:16, 12/7/21) The Pound Australian Dollar (GBP/AUD) exchange rate looks to end the European session much the same as it started, with the pairing consolidating this afternoon at AUD$1.8547.

The absence of significant movement can be attributed to a lack of data releases. Boris Johnson’s stance has remained consistent regarding 19 July- while a watering down of freedoms has been inferred, the Prime Minister is expected to confirm that ‘Freedom Day’ will go ahead later this afternoon.

Meanwhile, the Australian position hasn’t changed. A slow vaccination rollout continues to cause concern, with business and consumer confidence offering AUD a chance to rally later in the week.

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GBP/AUD Exchange Rate Favours Pound as UK Data Bolsters Trading Sentiment

Pound Australian Dollar (GBP/AUD) is trading sideways this morning as the Pound (GBP) consolidates last week’s gains.

At the time of writing, the Pound trades at AUD$1.8572, virtually unchanged from this morning’s opening levels.

Pound (GBP) Consolidates as Economy looks to Profit from 19 July Reopening

Despite rising hospitalisations and a steady increase in covid cases, the Pound (GBP) remains well supported against the Australian Dollar (AUD) in early trade this week.

The British government maintain that delaying the scheduled July 19 reopening would be detrimental to the economy as well as the education system and public wellbeing and plan to go ahead with lockdown easing, albeit stressing that ‘we must all take responsibility so we don’t undo our progress, ensuring we continue to protect our NHS.’

The news has encouraged sentiment among business owners, who anticipate growth as customers are encouraged to spend.

Sterling continues to benefit from Britain’s quick vaccination rollout, with more than 87% of British adults now having received at least one dose. Crucially, widespread immunisation has weakened the link between cases, hospitalisations and deaths.

Although progress is evident, the UK is not entirely out of the woods. Levels of joblessness have risen to their highest level since 1997 and some remain sceptical of sustained economic recovery, as Commerzbank analysts recall that Boris Johnson’s previous reluctance to reimpose lockdowns turned out to be unsustainable.

Sentiment around the Pound is likely to be affected this week by Tuesday’s Inflation Rate release, which is expected to reach 2.2% in June .

Australian Dollar (AUD) Weakens as Covid Infections Increase

The Australian Dollar (AUD) is subdued this morning as domestic covid cases are shown to have increased by 45%. The Delta variant of the coronavirus is raging across Sydney, causing the country to report the highest total of cases in a year.

AUD was already at a disadvantage as Friday’s session closed, as its biggest trading partner, China, initiated a tech selloff alongside a cut to its Reserve Ratio Requirements (RRR). Beijing’s cracking down on the fast growing tech market raised concerns over the possibly fading economic rebound for the world’s second-largest economy, inciting a risk-off trading mood.

The Reserve Bank of Australia’s (RBA) Governor, Philip Lowe, was optimistic about Australian economic recovery last Thursday, announcing the central bank’s plans to start tapering in September; RBA also reaffirmed its commitment to achieving full employment and inflation consistent with targets.

Lowe’s statements, however, are insufficient to calm the misgivings of Aussie traders, as only 10% of Australians have been double vaccinated against the virus that now sweeps in with force. Gladys Berejiklian, New South Wales premier, has warned that “much worse” is to come in terms of new infections in the outbreak.

GBP/AUD Forecast: Covid Cases to Drive Market Movement

Looking forwards, the biggest driver of GBP/AUD movement is likely to be the emergence of new covid cases and governmental responses towards them. Cases in the UK and Australia are both expected to rise; as the less ‘risky’ currency of the two, the Pound is most likely to benefit from this outcome.

In addition, positive UK Inflation figures could boost Sterling later in the week, with another rise in price growth potentially placing more pressure on the Bank of England (BoE) to consider tapering its quantitative easing programme.