GBP/AUD Exchange Rate Steady, UK Covid Cases Continue to Rise
The Pound Australian Dollar (GBP/AUD) exchange rate held steady this morning despite rising concerns over disruptions to the UK’s supply chains. The pairing is currently fluctuating around AU$1.89.
As a result, Pound traders have become increasingly concerned about the outlook for the UK economy, with the spectre of Brexit still haunting the nation’s economic mood.
Andrew Sentence, a former member of the Bank of England’s (BoE) monetary policy committee (MPC) commented on the threat to the economy:
‘It’s quite striking, I don’t think we can dismiss this as a flash in the pan. Now that lockdown has been eased, we’re seeing a truer reflection of the impact of Brexit and issues building up before the pandemic.
Meanwhile, UK coronavirus deaths are now predicted to be around 100 day, while daily cases are up by 3,986 versus last week.
Added to this, new UK research reports that double-jabbed people could lose protection against the coronavirus within six months.
Professor Tim Spector of King’s College London said:
‘In my opinion, a reasonable worst-case scenario could see protection below 50% for the elderly and healthcare workers by winter.
‘If high levels of infection in the UK, driven by loosened social restrictions and a highly transmissible variant, this scenario could mean increased hospitalisations and deaths.’
Consequently, GBP traders have become more worried about a further rise of cases throughout the autumn and winter months.
AUD Exchange Rate Sinks as Risk Sentiment Sours
The Australian Dollar (AUD) dipped today because of souring risk sentiment as fears grow over the efficacy of the coronavirus vaccines in the long-term.
As a result, demand for the risk-sensitive ‘Aussie’ has slumped on fears that Covid-19 infections could further intensify in the coming months.
In Australian economic data, today saw the release of Australia’s construction work done data for the second quarter.
Analysts at Reuters commented:
‘Australian construction work rose by less than expected in the June quarter as home building levelled off after a strong run, a result likely to disappoint given coronavirus lockdowns will further hamstring activity this quarter.
‘Figures from the Australian Bureau of Statistics out on Wednesday showed the value of construction work done rose a real 0.8% in the June quarter to A$52.88 billion ($38.36 billion), short of market forecasts of a 2.5% increase.’
A combination of domestic economic uncertainty and growing concerns for the global economy have, however, contributed to AUD/GBP exchange rate weakness today.
GBP/AUD Exchange Rate Forecast: RBA Speech in Focus
Australian Dollar (AUD) investors will be looking ahead to tomorrow’s speech from Luci Ellis, the assistant governor at the Reserve Bank of Australia (RBA).
Any downbeat commentary about the state of the Australian economy would be AUD-negative.
Risk sentiment will continue to drive the AUD/GBP exchange rate, however, with any signs of growing concerns over Covid-19 worldwide further dragging down demand for the risk-averse currency.
Pound (GBP) traders will continue to eye the UK’s Covid-19 developments. Could rising cases and hospitalisations weaken Sterling?