The Pound to Australian Dollar exchange rate was rangebound this morning as increased risk appetite supports AUD.
At the time of writing this morning, the pair is currently trading around AU$1.7865.
UK Starts to Eye Easing of Lockdown Restrictions
The Pound (GBP) was supported this morning as Prime Minister Boris Johnson hailed the success of the UK’s vaccination rollout.
Lockdown measures in the UK will begin to be reviewed as the country meets its target of vaccinating 15 million people by the 15th February, today.
Prime Minister Boris Johnson will set out his roadmap to easing lockdown restrictions on the 22nd of February, with many Tory backbenchers hoping restrictions will be eased sooner rather than later.
Speaking yesterday Mr Johnson said:
‘Today we have reached a significant milestone. No one is resting on their laurels. We’ve still got a long way to go and there will undoubtedly be bumps in the road, but after all we’ve achieved, I know we can go forward with great confidence.’
Though it appears that the government and investors remain cautious as to when lockdown restrictions should be eased.
Speaking this morning, Health Secretary Matt Hancock said:
‘Right now, as of today, at the latest count there are still over 23,000 people in hospital with Covid – that’s more than in the April peak – so we’ve still got some way to go, but we are looking to set out that road map on Monday.’
Australian Dollar Supported by Weakness of US Dollar (USD)
The Australian Dollar was itself supported by the continuing weakness of the US Dollar this morning.
The US Dollar has suffered as the size and timing of the proposed stimulus package worries investors and policymakers that a rise in inflation is imminent.
Furthermore, as vaccination rollouts begin across the globe, the US Dollar finds itself suffering, and the risk-sensitive Australian Dollar gains momentum.
A rally in iron ore prices also provided some additional support for the commodity-related ’Aussie’, and if iron ore prices push higher, AUD could also rise.
Pound to Australian Dollar Outlook: UK Lockdown Easing in Focus
The Pound to Australian Dollar exchange rate will be dictated by any coronavirus developments this week, with any indication from MPs that restrictions can begin to be eased starting next week will push Sterling higher.
Pound investors will also be looking to inflation rate data released from the UK on Wednesday. With forecasts showing that inflation will be at 0.5% which is a slowdown of 0.6% at the end of 2020 which could be negative for GBP.
Australian Dollar investors will be looking towards tomorrow’s Reserve Bank of Australia (RBA) meeting minutes, and following from speech Governor Christopher Kent with any hawkish commentary surrounding the state of Australia’s economy pushing the ‘Aussie’ higher.
In the second half of the week, both Pound and Australian Dollar investors will be looking to preliminary PMI data, which will indicate the current state of both economies, with the UK still being in full lockdown the Pound could suffer.