(Updated 17:01 04/01/21)
The Pound Australian Dollar Exchange has remained muted with a slight dip this evening, as confidence in the Pound falters in the midst of a press conference by UK Prime Minister Boris Johnson.
At time of writing, the GBP/AUD exchange rate is at around $1.8701, which is around -0.2% down from this morning’s figures.
Pound Australian Dollar (GBP/AUD) Exchange Rate Rangebound as UK Holds Off on Further Restrictions
The Pound Australian Dollar exchange rate has moved within a limited range today. The Pound has been strengthened by a lack of further Covid-19 restrictions, whereas the Australian Dollar has seen a boost from a strong Chinese Yuan (CNY).
At time of writing the GBP/AUD exchange rate is at around $1.8742, which is virtually unchanged from this morning’s opening figures.
Pound (GBP) Boosted by Omicron Studies and Rate Hike Bets
The Pound has ticked upward against its rivals today amid further domestic reports indicating that the Covid-19 Omicron variant may be less severe than first thought.
Both Prime Minister Boris Johnson and UK Vaccines Minister Maggie Throup have both stated that the conditions of those hospitalised with the variant seem to be ‘less severe’.
The certainty of their stance may have helped boost Sterling, although this may have been undermined by Johnson’s admittance that further measures are still ‘under review’.
The Pound’s upward movement may have been hampered by ongoing issues surrounding the ongoing spike in Covid-19 cases. Staff shortages persist across the country’s healthcare and educations sectors, and supplies of lateral flow tests continue to be inconsistent.
Elsewhere, Sterling may have been buoyed today by investor speculation that the Bank of England (BoE) may raise interest rates next month. Analysts are predicting that the central bank will raise rates twice in the coming year.
Australian Dollar (AUD) Buoyed amid Riskier Market Mood and Chinese Strength
The Australian Dollar (AUD) has climbed slightly today amid a risk-on market mood. The currency is also likely to have been boosted by the relative strength of the Chinese Yuan (CNY).
Some optimism in the Chinese property markets may have helped push the ‘Aussie’ up today, as property developer Evergrande’s shares soared on Tuesday following a government order to demolish 39 buildings on the resort island of Hainan.
Despite reassurances from the firm, investors are concerned and this coupled with local lockdowns may lead to some long-term uncertainty in the Yuan. This in turn may affect confidence in the Australian Dollar .
Soaring Covid-19 cases across Australia could also cap any potential gains for AUD as case numbers hit a new record on Tuesday.
The country recorded 47.799 new inflections on Tuesday as citizens struggled to source testing kits amid low supplies, stockpiling and inflated prices on those remaining. Despite the spike in infections, Prime Minister Scott Morrison has ruled out subsidising the cost of testing kits citing a need for ‘personal responsibility’.
GBP/AUD Exchange Rate Forecast: Will Both Countries see Service Sector Growth Fall?
Looking to the week ahead, the UK will see the final reading of December’s PMI for the country’s services sector. The index is currently forecast to fall drastically, which may come as little surprise given the struggles reported in the UK’s hospitality sector over the Christmas period. Should these figures print as expected then it could cause the Pound to fall.
The Australian Dollar may see speculative bets from investors following the release of the RBA Chart Pack on Wednesday, particularly if the Reserve Bank of Australia (RBA) gives any particularly hawkish forward guidance. Australia’s final reading of its PMI for the service sector is also due on Wednesday and is currently forecast to fall which may pull AUD down with it.
Both currencies are also likely to continue to be affected by rising Covid-19 cases and the possibility of any additional restrictions.