Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Breaks Through AU$2.0
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate rallied by 1.7% this morning, leaving the pairing trading by around AU$1.9966.
The Australian Dollar struggled on Monday, as traders flocked to safe-haven currencies as coronavirus fears dominate markets.
Tensions increased after Saudi Arabia shocked markets after pledging to cut oil prices and boost production sending oil prices 30% lower.
Added to this, the number of cases worldwide passed 110,000 and the death toll neared 4,000.
The ‘Aussie’ slumped on Monday, allowing the GBP/AUD to break through the AU$2.0 mark earlier in the session. This was the first time the pairing pushed beyond this level since May 2016.
While this was temporary, the Australian Dollar remained notably lower against the Pound.
Risk appetite plummeted today after investors drove US bond yields below 1% after markets bet the US Federal Reserve would be forced to cut rates by at least 75 basis points later this month.
Commenting on this, Chief Executive at stockbroker TD Ameritrade Singapore, Chris Brankin said:
‘Wild is an understatement. Not just us, but across the globe you would have every broker/dealer raising their margin requirements […] trying to basically protect our clients from trying to leverage too much risk or guess where the bottom is.’
UK Budget in Focus as Coronavirus Fears Increase
The Pound received a boost against the risk-sensitive Australian Dollar after markets flocked to safe-haven currencies.
The number of coronavirus cases in the UK reached 280, while the third death due to the virus announced on Sunday.
The mass quarantine in Italy also spooked markets, and Wednesday’s UK budget is likely to be heavily scrutinized.
It is expected Chancellor Rishi Sunak will announce measures to help support UK growth amid the outbreak.
Pound Australian Dollar Outlook: Will GBP/AUD Extend Today’s Gains?
Looking ahead, the Pound (GBP) could extend today’s gains against the Australian Dollar (AUD) following the release of like-for-like retail sales.
If the BRC’s sales rise higher than forecast, rebounding from January, Sterling will edge higher.
Meanwhile, the ‘Aussie’ could make further losses following the release of National Australia Bank’s (NAB) business confidence.
If confidence slumps further than expected, the Pound Australian Dollar (GBP/AUD) exchange rate will rise higher.