The Pound Australian Dollar exchange rate rose this morning following England’s easing of lockdown measures as of today. Vaccines minister, Nadhim Zahawi, warned that there was ‘no perfect time to take this step’, with the number of daily infections predicted to hit 100,000 a day, according to Professor Neil Ferguson, the architect behind Britain’s lockdown strategy.
What’s Been Happening: Delta Covid-19 Fears Weighs on Market Mood
The GBP/AUD exchange rate rose last week as UK markets awaited the lifting of lockdown restrictions on July 19. With confidence growing in the outlook for the British economy as a result, the Pound edged higher against the ‘Aussie’.
Last week also saw the latest UK unemployment gauge fall in the last quarter as the easing of lockdown measures helped boost hiring.
UK Chancellor Rishi Sunak also expressed optimism about the UK’s labour market and overall economy, saying:
‘As we approach the final stages of reopening the economy, I look forward to seeing more people back at work and the economy continuing to rebound.’
Market mood fluctuated last week, however, as concerns over the highly transmissible Delta coronavirus variant dampened market confidence, limiting demand for the risk-sensitive ‘Aussie’.
Asia struggled with a slow pace of inoculation sparking concerns that China – the world’s second-largest economy – could struggle from a slowdown in near-term growth.
China is Australia’s largest trading partner, so any signs of a slow-down in the nation’s economy translates to a weakened Australian Dollar.
Australia’s consumer sentiment gauge also held steady in July following the shutdown of Sydney, Australia’s most densely populated city.
Three Things to Watch Out for This Week
- UK Covid-19 Developments
Now that England has lifted lockdown restrictions, we could see growing concern over the rising numbers of daily infections. If the Government warns of further lockdown measures in autumn and winter, then Sterling would begin to struggle against the ‘Aussie’.
- RBA Updates
This week will see the release of the latest Reserve Bank of Australia’s (RBA) meeting minutes on Tuesday and a speech from Governor Philip Lowe on Thursday. Could a dovish turn from the bank see the Australian Dollar fall?
- Flash UK PMI Data
Friday will see the release of the preliminary UK services and manufacturing PMI figures for July. Could signs of a recovering economy boost the GBP/AUD exchange rate?
Pound Australian Dollar Forecast
The GBP/AUD exchange rate could head higher this week as the UK’s economy cautiously reopens following the lifting of lockdown restrictions.