The Pound Australian Dollar (GBP/AUD) exchange rate is steadily rising during this morning’s European session as daily coronavirus cases fall across the UK.
At the time of writing the GBP/AUD pairing are trending around the AU$1.8897 level as positive inflation figures from Australia were not enough to offset concerns over the ongoing coronavirus outbreak in the country.
Pound (GBP) Exchange Rates Supported by Coronavirus Recovery Hopes
The Pound has found itself steadily rising against the Australian Dollar since markets opened this morning as a fall in daily coronavirus cases from the UK propels investors to Sterling.
Whilst daily cases have fallen for the last 7 days, the Prime Minister Boris Johnson this morning warned the public to not become complacent.
Speaking to UK radio earlier this morning, the Prime Minister said:
‘We’ve seen some encouraging recent data, there’s no question about that, but it is far, far too early to draw any general conclusions.’
‘The most important thing is for people to recognise that the current situation still calls for a lot of caution and for people just to remember that the virus is still out there, that a lot of people have got it, it still presents a significant risk.’
Sterling has found further support this morning following the release of the latest annual house price index in the UK.
Though housing prices have softened on the year, the figure remains in double digits at 10.5%.
Tom Bill, head of UK residential research at Knight Frank, commented on the outlook for the UK housing:
‘The UK housing market will continue to be underpinned by strong economic fundamentals but the distortive effects of the pandemic and stamp duty holiday are fading.’
‘As supply picks up, double digit house price growth is likely to become single-digit growth by the end of the year. Demand remains strong despite the end of the stamp duty holiday, a fact that will be reinforced if Covid starts to move further into the rear-view mirror.’
Australian Dollar (AUD) Exchange Rates Undermined by Ongoing Coronavirus Outbreak
The Australian Dollar has weakened this morning despite a rise in inflation in Australia for Q2 on the year.
Consumer prices lifted to 3.8%, up from 1.1%, and way above the Reserve Bank of Australia’s inflationary target.
However, analysts at ING have suggested that the rise will be dismissed as ‘transitionary’ and won’t be given too much of a thought by the bank:
‘We can’t see the Reserve Bank of Australia (RBA) being too alarmed by this data. They have made it quite clear that they anticipated a short-lived spike in inflation above the upper bound of their target and were unlikely to be moved by this. In recent months, we have seen the RBA statements on policy change to allow for a more flexible response to growth, inflation and most importantly, labour market developments.’
AUD exchange rates continue to be undermined by the ongoing coronavirus situation in Australia, as Victoria and South Australia end their lockdowns, Sydney extends its own lockdown by four weeks.
New South Wales State Premier Gladys Berejiklian spoke in a televised press conference:
‘I am as upset and frustrated as all of you that we were not able to get the case numbers we would have liked at this point in time but that is the reality.’
Pound Australian Dollar Exchange Rate Outlook: Federal Reserve Interest Rate Decision in Focus
A lack of notable data from both the UK and Australia will see investors instead look towards coronavirus developments alongside the global market mood to drive movement in the pairing.
This evening, the latest interest rate decision from the Federal Reserve could cause the Australian Dollar to stumble if the bank continues to take a more dovish tone, driving demand to the safe-haven US Dollar.