Pound Australian Dollar Exchange Rate Slips as ‘Aussie’ Appealing
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has been attempting rebound this week. However, unlike other major Pound (GBP) exchange rates, Sterling’s gains against the strong Australian Dollar (AUD) have been limited.
Since GBP/AUD opened this week at the level of 1.7486, a Pound rebound has kept the pair trending higher.
At the time of writing on Thursday morning, GBP/AUD trends in the region of 1.7583. However, this is well below yesterday’s weekly high of 1.7690 and especially far below last week’s highs of 1.7793.
GBP/AUD has barely recovered a cent and is still considerably lower than it was last week.
This is largely due to broad resilience in the Australian Dollar, which is still appealing against many other major currencies.
Pound (GBP) Exchange Rate Outlook Improving but Gains Slowing
This week has seen Bank of England (BoE) Governor Andrew Bailey express hesitance on negative interest rates, and it has also seen confirmation that the UK is ramping up its coronavirus vaccination efforts.
As a result of these factors, the Pound outlook has been improving. This has helped the Pound to sustain some gains this week.
Sterling is sliding back against a stronger Australian Dollar, as the British currency’s recovery rally runs out of steam.
Today’s holiday season data from Britain’s key services industry is helping support Sterling a little as well. Many businesses, including some hotels, have not been hit as badly by the pandemic in recent months than initially feared.
Australian Dollar (AUD) Exchange Rates Remain Broadly Appealing
Even after months of strong performance, the Australian Dollar’s bullishness may not have hit a ceiling just yet.
The Australian Dollar outlook only continues to improve, as the nation outshines its contemporaries on handling the coronavirus pandemic, and a strong trade outlook is only further boosting optimism.
After a jump in coronavirus cases in Sydney recently, the nation has once again caused infection rates to fall to around zero due to quick action to contain the outbreak.
Much stronger than expected Chinese trade data also supported AUD today and helped it to recover some losses against Sterling.
According to Economists at Credit Suisse:
‘Near-total local eradication of COVID-19 and pro-cyclical exposure to Asian demand have been idiosyncratic drivers of AUD strength beyond what is implied by USD weakness. This is driving speculation that the Reserve Bank of Australia (RBA) might push back against AUD strength. Furthermore, external accounts are very supportive of AUD strength.’
Pound Australian Dollar (GBP/AUD) Exchange Rate Recovery May Fall Short
While the Pound outlook has improved this week, it is still nowhere near as bullish as the Australian outlook.
As Australian data and handling of the coronavirus pandemic continues to consistently impress markets, it looks like the Australian Dollar’s strong streak may stick around.
If there is a shock to markets that causes investors to avoid taking risks, this could dampen AUD appetite. However, even this would likely be temporary if global vaccine rollout continues to improve.
Tomorrow’s Australian home loans data is unlikely to have a big impact on the Australian Dollar’s movement. Instead, risk-sentiment will continue to drive AUD.
As for the Pound, it could strengthen and may advance further against the ‘Aussie’ if tomorrow’s UK data impresses. Key November stats including trade balance, production and growth rate figures will be published.
Of course, high UK coronavirus infection rates continue to concern Pound Australian Dollar exchange rate investors as well.