(Updated 16:45 30/12/21)
The Pound Australian Dollar (GBP/AUD) exchange rate has remained muted over the course of the day, as a risk-on market mood has continued to help buoy the Australian Dollar.
At time of writing the GBP/AUD exchange rate is at around $1.8601, which is largely unchanged from this morning’s figures.
Pound Australian Dollar (GBP/AUD) Exchange Rate Trades Narrowly as Australia Eases Testing
The Pound Australian Dollar exchange rate has fallen overnight and is trading within a narrow range so far today, as a risk-on trading mood pushes the Australian Dollar upward.
At time of writing the GBP/AUD exchange rate is at around $1.8562, which is roughly -0.2% down from this morning’s opening figures.
Australian Dollar (AUD) Boosted by Looser Covid-19 Measures
The Australian Dollar (AUD) has risen against many of its rivals today amid a risk-on trading environment. Market sentiment seems to have improved this week as many governments refuse to impose harsher restrictions in the face of soaring global Covid-19 cases.
The ‘Aussie’ could well have been boosted by such an approach today after the Australian government relaxed its testing rules across the country. Despite daily cases reaching 20,000 for the first time during the pandemic, asymptomatic individuals are being asked to perform tests at home rather than taking a PCR test. With isolation rules also relaxed, it’s hoped that the change will relieve pressure on the country’s healthcare, hospitality, and travel industries.
There could continue to be some headwinds for AUD however in the form of fluctuating iron ore prices. Whilst prices have rebounded recently, analysts are expecting the commodity to remain under pressure going in to 2022. Curbs imposed by the Chinese government, further debt defaults by property giant Evergrande, and improving production from Australia and Brazil are all thought to be potential risk factors.
Pound (GBP) Dips as Covid-19 Cases Hit Another New Record
The Pound has dipped against many of its rivals today amid soaring Covid-19 cases and further evidence of a severe jump in the UK’s cost of living.
The UK reported 183,037 Covid-19 cases on Wednesday, representing another new record and an increase of 53,000 from Tuesday’s previous record figures. Prime Minister Boris Johnson has said that he would not introduce restrictions before the New Year with 58% of eligible adults having had a Covid-19 booster. Health experts are concerned about the supply of Covid tests in the run up to the New Year celebrations however, and the Pound is likely to react negatively to any further restrictions should they be introduced.
The Pound could well see headwinds from reports today that the UK’s cost of living could soar in 2022. The Resolution Foundation has predicted that households could face a hit of £1,200 as energy bills rise and wage growth stagnates. With the government’s energy cap to be reviewed in February there are concerns that prices could climb even higher after inflation in the UK hit a ten year high in November.
Torsten Bell, chief executive of the Resolution Foundation, said:
‘So large is this overnight cost-of-living catastrophe that it’s hard to see how the government avoids stepping in. Top of the government’s new year resolutions should be addressing April’s energy bills hike, particularly for the poorest households, who will be hardest hit by rising gas and electricity bills.’
GBP/AUD Exchange Rate Forecast: Will Either Country See Further Covid-19 Case Records?
With no significant data for either currency due this week, it’s likely that the pair will be affected by global developments surrounding Covid-19 cases and the Omicron variant.
The Pound could drop further should the UK’s Covid-19 cases continue to skyrocket, with the supply issues surrounding testing potentially generating further uncertainty. Should the government introduce further restrictions following New Year celebrations then Sterling may well tumble.
The Australian Dollar’s upward movement could be stalled by continually rising Covid-19 cases, as well as any changing restrictions across the country’s various states. Further changes in the price of iron ore as well as any significant developments in the Chinese property sector could hamper AUD growth.