GBP/AUD Remains Elevated as Markets Fret over South African Covid Variant
(Updated 16:00, 26/11/2021) The Pound Australian Dollar (GBP/AUD) exchange rate continues to trade up this afternoon as investors retain a preference for less-risky currencies in the wake of the B.1.1.529 discovery.
The UK’s Secretary of State for Health and Social Care has now given a statement to Parliament regarding the new variant, concerning the action government is taking: the Rt Hon Sajid Javid MP conceded that B.1.1.529 ‘is of huge international concern’ as ‘it is highly likely that it has now spread to other countries’.
Javid continued to say that the Department for Health and Social care ‘are concerned that this new variant may pose a substantial risk to public health’ and that the current situation is a reminder that the pandemic is far from over.
He urged the public to get their booster injections as soon as possible, reassuring listeners that the UK would be working with its international partners to ensure an aligned response.
Tensions are still running high, however, as one of Nicola Sturgeon’s key advisors on the pandemic has said there is ‘worry’ that the new supervariant may be already in Scotland.
Professor Devi Sridhar commented:
‘I don’t think we can stop importation fully. That’s the lesson, you can’t stop it, you can delay it and buy time, and that delay gives you more time to get boosters out to people and figure out your game plan.’
Original article continues below:
Pound Australian Dollar Exchange Rate Climbs as New Covid Variant Spooks Markets
The Pound Australian Dollar (GBP/AUD) exchange rate is skyrocketing this morning as risk aversion dominates markets. The discovery of a new coronavirus variant with possible vaccine immunity has sent investors flocking to safe-haven currencies.
At the time of writing, GBP/AUD is trading at A$1.8662, up 0.6% from today’s opening levels.
Pound (GBP) Supported Against Riskier Assets
The Pound (GBP) is climbing overall today despite a lack of significant data, as the currency is perceived to pose less risk than the majority of its peers.
Markets are responding fast to the discovery of Covid variant B.1.1.529, which many are calling the ‘worst ever’ strain given its ability to mutate quickly.
The variant’s known series of mutations worry scientists because they demonstrate potential to evade the body’s immune response, making the virus more transmissible.
B.1.1.529 was first detected in South Africa and has since been identified in Hong Kong and Botswana. Given the rapid spread of the Delta variant following its detection in India, authorities are reacting fast to impose travel bans to and from affected countries.
South Africa will be placed under England’s red list travel restrictions from midday on Friday: the travel ban will also cover flights from Namibia, Lesotho, Botswana, Eswatini and Zimbabwe.
Tom Peacock, a virologist at Imperial College London, described the mutations as ‘really awful’ but said cases were currently ‘super low’; Francois Balloux, professor of computational systems biology at University College London also stressed that ‘there is no reason to get overly concerned’.
Despite reassurances, markets are understandably cautious as, a month ahead of Christmas, there are concerns that the variant could trigger the need for further restrictions.
Australian Dollar (AUD) Plummets despite Upbeat Retail Sales
The Australian Dollar (AUD) is trending down today on account of risk aversion in the markets, in spite of a positive data release this morning from the Australian Bureau of Statistics.
Retail sales in Australia rose by 4.9% in October 2021, beating market consensus of 2.5% and following 1.3% growth a month earlier, according to the data.
This was the second straight month of increase in retail trade and the strongest pace since November 2020, buoyed by the end of lockdowns in New South Wales, Victoria, and the Australian Capital Territory.
According to Gareth Aird, CBA’s head of Australian economics:
‘The landscape has changed markedly as vaccination rates are exceptionally high, lockdowns are over and the economy is once again starting to fire on all cylinders.’
GBP/AUD Exchange Rate Forecast: Covid News to Keep Rates Subdued?
Looking ahead, a lack of significant data through today’s session leaves the Pound Australian Dollar to trade on external factors: the most prominent of which is currently the discovery of the B.1.1.529 Covid variant.
Traders’ bearish attitude is likely to keep the ‘Aussie’ subdued against the Pound for the remainder of today; data from the Bank of England (BoE) may influence trading on Monday, exerting potential Sterling headwinds as consumer credit is expected to have fallen in October.