Pound to Australian Dollar Exchange Rate Climbs but Appeal Remains Limited
This week has seen the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate advance. Sterling (GBP) is benefitting from Britain’s latest fiscal stimulus news, while the Australian Dollar (AUD) is being weighed by weaker market risk-sentiment.
After opening this week at the level of 1.7975, GBP/AUD briefly dipped lower before rebounding. This week’s rebound has been much stronger than last week’s, with GBP/AUD gaining well over a cent.
This morning, GBP/AUD touched on a half-month-high of 1.8159. While GBP/AUD has slipped a little from that best level, it still trends high in the region of 1.8130 at the time of writing.
Key UK and Australian data will be published next week. However, developments in the coronavirus pandemic may continue to be even more influential for the Pound to Australian Dollar exhange rate outlook.
Pound (GBP) Exchange Rate Outlook Limited as Concerns over UK Economy Persist
The Pound has been climbing again this week, due to both weakness in rivals as well as some domestic support.
Investors have found the Pound a little more appealing as they digest the latest fiscal stimulus announced by UK Chancellor Rishi Sunak.
Sunak’s Summer Statement in the middle of the week led to some late reaction yesterday, which drove the Pound to weekly highs against rivals like the Australian Dollar.
However, AUD weakness is also to blame for GBP gains. The Pound outlook remains filled with uncertainties and concerns, and credit rating agency Moody’s published a dire forecast for Britain’s economy today.
A group of Moody’s top analysts said:
‘We forecast a contraction of 10.1% in the UK’s GDP for this year, but expect a gradual subsequent recovery on the back of the easing in lockdown measures, with growth rebounding to 7.1% next year’
Australian Dollar (AUD) Remains Under Pressure amid Victoria State Lockdown
The Australian Dollar has seen one of its worst weeks in quite some time, as investors react to a concerning shift in Australia’s coronavirus outlook.
As fears of a global ‘second wave’ of infections surge, Australia’s State of Victoria appears to have been hit surprisingly hard by a jump in cases.
To keep on top of the pandemic, Australia’s government has issued a lockdown in Victoria. As this is one of Australia’s most active states, analysts predict it will have a significant negative impact on Australia’s economic recovery.
Concerns over how Australia’s economic outlook will struggle amid this latest lockdown are weighing on the Australian Dollar. Second wave fears are also weighing on risk-sentiment, overall keeping AUD down and making it easier for GBP/AUD to hold highs.
Pound to Australian Dollar (GBP/AUD) Exchange Rate Awaits Coronavirus Developments
Could the Australian Dollar’s (AUD) months of strong performance be coming to an end?
If Victoria’s coronavirus crisis persists and Australia’s reopening and economic recovery are significantly dented, investors may have little reason to buy the Australian Dollar again.
This could limit the Pound to Australian Dollar exchange rate’s weakness and make it easier for the pair to hold its best levels.
Even if next week’s typically influential Australian data impresses, the Australian Dollar’s appeal could remain limited.
Australian consumer confidence data is due on Wednesday, with key job market stats due on Thursday.
It will be a key week for UK data too, with UK growth, inflation and job stats due throughout the week.
However, Britain’s coronavirus and Brexit situations remain focuses for Sterling investors. As a result, the Pound to Australian Dollar (GBP/AUD) exchange rate may not see much strength either.