Pound Australian Dollar Exchange Rate Rangebound as Australian Covid Cases Skyrocket

(Updated 16:48 07/01/21)

The Pound Australian Dollar (GBP/USD) has trended sideways throughout the rest of the day, as risk-off trading helped boost the Pound (GBP).

At time of writing the GBP/AUD exchange rate is at around $1.8914, largely unchanged from this morning’s figures.

Pound Australian Dollar (GBP/AUD) Exchange Rate Climbs amid Soaring Australian Covid Cases

The Pound Australian Dollar (GBP/AUD) exchange rate has risen overnight and continued to climb today, as soaring Covid-19 case numbers continue to drive the Australian Dollar (AUD) down.

At time of writing the GBP/AUD exchange rate is at around $1.8933, which is up roughly 0.2% from this morning’s opening figures.

Australian Dollar (AUD) Drops As Country Struggles with Covid Cases and Testing Regime

The Australian Dollar (AUD) has fallen against its rivals today amid soaring Omicron cases in New South Wales (NSW) and continuing issues with the country’s testing regime.

Whilst AUD investors may see some comfort from modelling predicting a late-January peak to Covid-19 infections in NSW, surging Covid-19 hospital admissions and soaring case numbers may undercut any optimism. Hospital admissions in NSW have doubled to a record 1,738 in just over a week, with more than 100,000 Covid-19 cases recorded in the past three days.

Australian business leaders have urged Australian federal and state governments to ‘hold their nerve’ against introducing further restrictions, as high case numbers continue to place pressure on supply chains and small businesses.

Alexi Boyd, Council of Small Business Organisation Australia chief executive, had the following to say on the country’s restrictions and testing programme:

‘It‘s a lot easier for a small-business owner to say to a worker ‘don’t come into work’ because he tested positive than it is for that worker to come to work and infect an entire shift of staff and in that small business to be knocked out for a week.’

The ’Aussie’ could see a boost from rising commodity prices however as the price of iron ore saw a boost on Thursday. Demand for the commodity is expected to recover in China following the 2022 Winter Olympics.

Pound (GBP) Climbs Despite Ongoing NHS Staffing Crises

The Pound has ticked upward against some of its competitors today. Gains for Sterling have been limited however, as ongoing high Covid-19 case numbers and severe staff shortages in the country’s healthcare sector place pressure on the currency.

This week has seen a 59% increase in staff absences across NHS England as the government drafted in 200 Armed Forces personnel in order to support the NHS in London. This comes after a week of soaring case numbers in the UK, with over 150,000 new cases reported each day in the past week.

The Pound could also see a dip following reports from business leaders at Next, Greggs, and B&M that soaring global inflation levels will cause them to have to pass on increased costs to customers.

Next boss Simon Wolfson has warned of the ongoing gap between inflation and wage growth:

‘If wage inflation is in line with our price increases – I don’t think it will be, but if it is – then it’s not going to be nearly as much of a problem as if wage inflation is a long way behind.’

GBP/AUD Exchange Rate Forecast: Will Either Country Be Able To Tackle Soaring Covid Case Numbers?

With no significant data for either currency for the rest of the week, it’s likely that the GBP/AUD pairing will continue to be affected by Covid-19 case levels in both countries. The Australian Dollar could see a boost should iron ore prices continue to rise.

Next week could see a boost to Sterling if GDP figures for November on Friday rise as forecast, although a predicted fall in the UK’s trade surplus could drive the Pound down. The Australian Dollar could be driven downward if retail sales figures on Tuesday fall as forecast, as well as a forecast narrowing of the country’s trade surplus.

Gareth Monk

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