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GBP/AUD Exchange Rate Edges Higher as UK Covid-19 Vaccine Rollouts Boost Confidence in Sterling

Australian Dollar Currency Forecast

GBP/AUD Exchange Rises as UK Vaccinations ‘Implies a Stronger Recovery Ahead’

The Pound to Australian Dollar exchange rate rose by 0.2% today, with the pairing currently fluctuating around AU$1.78.

Sterling rose against many of its peers today as the UK’s speedy vaccine rollout is buoying optimism over a faster economic recovery in the months ahead.

Marios Hadjikyriacos, an analyst at XM, explains:

‘The UK economy is still in a deep hole, but the swift pace of vaccinations implies a stronger recovery ahead.

‘The cheerful market mood is another element underpinning the pound, which has become linked to risk appetite during this crisis thanks to the UK’s chronic twin deficits that require capital flows from abroad.’

So far 18.9% of the UK population have received at least one dose of the coronavirus vaccine. Daily cases of Covid-19 are also down by -4,476 against last week.

Coming up, Andrew Bailey, the Governor of the Bank of England (BoE) is scheduled to deliver a speech later this afternoon.

Any bullish comments about the outlook for the British economy would further boost the GBP/AUD exchange rate.

Australian Dollar Struggles Despite Risk-On Market Mood

The ‘Aussie struggled to gain against the Pound today despite risk-on trade increasing demand for the risk-sensitive currency.

Australian markets are becoming increasingly optimistic about coronavirus vaccinations as this will help the global economy recover later this year.

The data calendar is quiet for Australia today, but BNY Mellon said they were optimistic about the Australian Dollar.

Geoff Yu, Senior EMEA Market Strategist at BNY Mellon, said:

‘The AUD has so far failed to extend its strong end-2020 performance into 2021. A wobbly start to the year in Asia, in addition to hopes of an earlier than expected shift in the US recovery expectations, has undermined the external story.

‘In the short term, headwinds may persist for the AUD but we continue to see a robust medium-term fundamental picture. Poor vaccination rates in the Asia-Pacific regions have dashed hopes for stronger and sustained normalisation in the region and will likely result in shut borders for longer than previously expected.’

Could Improving Risk Sentiment Boost the ‘Aussie’ This Week?

Australian Dollar traders will be looking ahead to tomorrow’s release of January’s Australian New Home Sales report. Any improvement in the outlook for Australia’s economy would be AUD-positive.

Tomorrow will also see the release of February’s Australian Consumer Inflation Expectations for February.

If it looks like the Australian economy is set to recover in the months ahead, then the ‘Aussie’ could head higher.

Risk sentiment will continue to drive the AUD/GBP exchange rate, however, so any signs of coronavirus vaccinations increasing world would boost AUD.

The GBP/AUD exchange rate could continue to head higher if Covid-19 vaccinations increase throughout the UK. As a result, Sterling is expected to remain strong this week.