Pound Australian Dollar (GBP/AUD) Exchange Rate See-Saws amid Omicron and Upbeat Mood
The Pound Australian Dollar (AUD) exchange rate is mixed today as GBP investors interpret the latest UK Omicron data.
Meanwhile, the Australian Dollar (AUD) is also struggling for direction. Although a Santa Claus rally is boosting the risk-sensitive ‘Aussie’, Australia’s own Covid concerns are limiting its gains.
Pound (GBP) Wobbles on Mixed Covid Data
The Pound (GBP) is wavering against the Australian Dollar (AUD) today. After yesterday’s rally, fuelled by some positive UK Covid data, feelings around the UK’s Covid situation may be mixed.
On the one hand, a new government study corroborates the two reports from Wednesday that suggest Omicron is 40-66% less likely to result in serious illness than the Delta variant. New research by the UK Health Security Agency (UKHSA) has found that people with the new variant are between 31% and 45% less likely to go to A&E and are 50% to 70% less likely to be admitted to hospital.
But on the other hand, all three reports highlight that Omicron is more transmissible and that vaccines are less effective against it. This means that even a smaller proportion of much higher case numbers could still lead to significant numbers of people requiring hospital treatment.
In addition, daily Covid cases reported in the UK hit a new record high yesterday of 119,789. The latest hospitalisation data also showed an increase, particularly in London. The capital could be an early indicator of the wider impact of Omicron as it has seen the earliest and fastest spread of the strain. In London, daily hospital admissions have tripled since Omicron emerged.
As such, GBP has wavered so far this morning. At the time of writing, it seems to be trading lower against the ‘Aussie’.
Australian Dollar (AUD) Undermined by Covid Airport Disruption
Meanwhile, the Australian Dollar is also wavering, though it’s seeming to edge higher against the Pound overall.
A Santa Claus rally is underpinning the risk-sensitive ‘Aussie’. Markets are upbeat on Christmas Eve following the recent publication of positive Omicron data.
However, the spread of the variant in Australia is starting to weigh on AUD.
Australia has cut the minimum interval between a second dose of the Covid vaccine and a booster shot from five months to four. The move comes as Omicron cases rise in the country. Officials fear that the sheer number of cases could lead to higher hospitalisations, even if Omicron is milder than Delta.
Additionally, rising Covid cases and isolations are wreaking havoc on Australia’s airlines. Covid testing and isolation requirements have lead to significant staff shortages, resulting in over 100 domestic flight cancellations.
As a result, the ‘Aussie’ so far seems unable to capitalise on the upbeat market mood.
GBP/AUD Exchange Rate Forecast: Pair to Waver in a Narrow Range?
GBP/AUD may continue to waver through the day if sentiment remains mixed.
In addition, the thin trading conditions on Christmas Eve may prevent any significant movements in the pair and keep both currencies trading in a relatively narrow range.