Pound Australian Dollar Exchange Rate Stabilises After Risk-On Mood Evaporates

(Updated 16:40 10/01/21)

The Pound Australian Dollar (GBP/AUD) exchange rate has fallen close to its opening position, as a strengthened US Dollar encoraged a risk-off market mood.

At time of writing the GBP/AUD exchange rate is at around $1.8923, virtually unchanged from this morning’s figures.

Pound Australian Dollar (GBP/AUD) Exchange Rate Tumbles amid Risk-On Trading

The Pound Australian Dollar exchange rate has fallen today, as the Australian Dollar has been boosted by a risk-on trading environment.

At time of writing the GBP/AUD exchange rate is at around $1.8891, which is around -0.2% from this morning’s opening figures.

Australian Dollar (AUD) Boosted by Optimistic Market Mood Despite Soaring Covid Case Numbers

The Australian Dollar (AUD) has risen against many of its rivals today amid a risk-on trading environment and a steady rise in commodity prices. This has come despite Covid-19 infections in the country surpassing 1 million, more than half in the past week alone.

Australian Prime Minister Scott Morrison has said that the country must learn to live with Covid-19 as businesses continue to struggle with staff shortages due to sickness and isolation. Steadily rising hospital admissions have forced some states to reintroduce restrictions in a bid to curb case numbers, a move that could cause confidence in AUD to falter.

Speaking to media on Monday, Morrison made his position clear:

‘Omicron is a gear change and we have to push through. You’ve got two choices here: you can push through or you can lock down. We are for pushing through.’

The ‘Aussie’ could see its losses underpinned by rising iron prices however, as the commodity continues to tick upward.

Pound (GBP) Dips Against Risky Rivals as Covid Death Toll Passes 150,000

The Pound (GBP) has fallen against some of its riskier rivals today amid an optimistic market mood. News this morning regarding potential changes to the UK’s Covid-19 restrictions may have helped the Pound to limit some of its losses however.

Prime Minister Boris Johnson has told reporters that he is considering cutting the country’s self-isolation period from five days to seven. The move comes as staff shortages continue to impact the country’s healthcare sector, with around 80,000 medical staff absent in the week to Jan 2 and military personnel deployed to aid NHS operations.

As the UK’s Covid-19 death toll reached 150,154, the world’s seventh worst, ministers have been discussing how the UK can continue to live with Covid. Housing Secretary Michael Gove had the following to say on Monday:

‘So, guided by the science, we can look to the progressive lifting of restrictions, and I think for all of us the sooner the better. But we’ve got to keep the NHS safe.’

The Pound may see some Brexit-related headwinds over the course of the week however, as UK foreign secretary and chief Brexit negotiator Liz Truss reiterated the UK government’s threat to invoke Article 16 if negotiations prove fruitless.

GBP/AUD Exchange Rate Forecast: Could GDP Figures Prompt BoE to Raise Rates Early?

Looking to the week ahead, Tuesday could see a fall in the UK’s December’s retail sales if figures print as forecast which could cause Sterling to dip. Friday’s forecast widening of the UK’s trade deficit and rise to GDP growth rate could boost the Pound however, particularly if investors see it as another sign that the Bank of England (BoE) may raise interest rates sooner than expected. GDP is also likely to be continue to be affected by any changes to the country’s Covid-19 restrictions, as well as developments surrounding the Northern Ireland Protocol.

Tuesday could be a day of mixed fortunes for the Australian Dollar. A forecast fall in the country’s trade deficit could help boost the ‘Aussie’, although an expected fall in November’s retail sales data could drive AUD down. Soaring Covid-19 infections could also continue to affect the Australian Dollar, as well as volatility in the price of iron ore.

Gareth Monk

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