Pound to Australian Dollar Exchange Rate Avoids Losses amid RBA Anxiety
Update 16:44 BST 03/08/2020:
Investors remained steady on the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate throughout today’s European session.
GBP/AUD continued to hover above the week’s opening levels of 1.8327. Investors are willing to hold higher on the Pound (GBP) for now amid hopes of a more optimistic UK coronavirus outlook.
However, this is also due to Australian Dollar (AUD) weakness. The worsening coronavirus situation in Australia combined with anxiety for tomorrow’s Reserve Bank of Australia (RBA) decision are weighing on the ‘Aussie’.
According to Analysts at ANZ Bank, the RBA is likely to remain cautiously optimistic tomorrow:
‘The RBA is expected to upgrade its view of 2020, in contrast to our downgrade. This reflects the respective timing of previous forecasts rather than a different view about the impact of the Melbourne lockdown. The RBA will be a little less positive about 2021 than it was before.’
(Originally published 09:23 BST 03/08/2020)
Pound to Australian Dollar Exchange Rate Touches Best Levels Since Early June
Investors have been buying the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate more and more since last week. This is despite a lack of solid demand for the Pound (GBP), as Britain’s coronavirus outlook remains filled with uncertainty.
After opening last week at the level of 1.8013, GBP/AUD trended flatly before picking up in the second half of the week.
Ultimately it was a week of impressive gains for GBP/AUD, with the pair sustaining over two cents of advances. GBP/AUD closed the week at the level of 1.8327.
At the time of writing on Monday morning, GBP/AUD is trending near a high of 1.8392. This was the best level for the pair in over a month and a half, since early June.
Pound (GBP) Exchange Rates Surge on Rival Currency Weakness
Last week was a heavily bullish one for the Pound. This was despite a lack of particularly supportive UK news or data throughout the week.
The Pound’s appeal was more due to broad weakness in rival currencies. In particular, a plummeting US Dollar (USD) benefitted the Pound last week.
As the US outlook became increasingly dampened by coronavirus and political uncertainty, the Pound became comparatively more appealing. This is because the UK handling of the pandemic has increasingly been perceived as better than the US handling.
Still, Sterling’s potential for gains is limited. Brexit uncertainties still weigh on the outlook, as do Bank of England (BoE) speculations.
Australian Dollar (AUD) Exchange Rates Pressured despite Strong ‘Aussie’ Data
The Australian Dollar (AUD) tumbled last week. Despite weakness in the US Dollar (USD), the ‘Aussie’ was not able to capitalise as risk-sentiment also worsened on deepening global coronavirus fears.
The Australian Dollar is often correlated to market sentiment for risk and trade. Worsening fears that the coronavirus pandemic will continue to impact major economies more than feared are keeping risk-correlated assets less appealing.
On top of this, speculation is rising that the Reserve Bank of Australia (RBA) could express concern over the Australian Dollar’s strength in its upcoming policy decision.
Concerns that the RBA could call the ‘Aussie’ overvalued are weighing further on the currency. These factors are preventing AUD from benefitting much from today’s Australian manufacturing PMI stats, which beat forecasts.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Awaits Central Bank News
The Pound to Australian Dollar exchange rate is advancing today, but will the pair be able to sustain these gains?
Sterling lacks domestic support and is mostly gaining on rival weakness. Both the Pound and ‘Aussie’ are highly jittery with support limited.
On top of this, investors of both currencies are likely to await upcoming central bank developments.
Tomorrow’s Asian session will see the Reserve Bank of Australia (RBA) hold its August policy decision. Some analysts predict the bank could express concern about AUD strength, which could knock the currency lower.
According to Eren Sengezer, Analyst at FXStreet:
‘the RBA could start voicing concerns over AUD strength and trigger a deep downward correction’
Other key Australian data including trade and retail stats could influence the AUD outlook tomorrow. They could give investors a better idea of how Australia has been weathering the coronavirus pandemic.
Later in the week, the Bank of England (BoE) will also hold its latest policy decision. This leaves plenty to drive the Pound to Australian Dollar (GBP/AUD) exchange rate outlook this week.