GBP/AUD Exchange Rate Falls as UK Health Secretary is ‘Incredibly Worried’ About New Covid Variant
The Pound to Australian Dollar (GBP/AUD) exchange rate is currently down by -0.4%, with the pairing fluctuating around AU$1.76 at the time of writing.
Sterling suffered today after UK Health Secretary Matt Hancock said he was ‘incredibly worried’ about the South African Covid-19 variant.
With the new variant presenting ‘even more of a problem’, GBP investors are remaining cautious over growing fears that the mutation could be resistant to some of the new vaccines.
Mr Hancock also added:
‘This new variant is so much more easily transmitted, it’s so much more contagious. You only need to come into contact with a tiny amount of it to catch the disease. And that’s what’s made this period so much harder.’
As a result, UK markets are becoming more cautious as the new variant threatens the recovery of the British economy in the months ahead.
In UK economic data, today saw the release of the latest Manufacturing PMI, which beat forecasts and rose to 57.5 in December.
However, Duncan Brock, the Group Director at the Chartered Institute of Procurement and Supply, was more pessimistic, warning:
‘After a severely turbulent year, UK makers still have a great deal to worry about. Job numbers continue to fall, and material shortages have resulted in the highest cost inflation since 2018. The sector is holding its breath until the terms of the new deal are fully understood and whether new business can be sustained in the same way in a post-Brexit marketplace.’
Australian Dollar (AUD) Heads Higher as China’s Economy is Predicted to Grow by 9% in 2021
The Australian Dollar (AUD) rose today following news that China’s economy – which is Australia’s largest trading partner – is predicted to expand by 9% in 2021.
As a result, the demand for risk-sensitive ‘Aussie’ has risen, with Covid-19 vaccines bolstering confidence in the global economy’s recovery.
In Australian economic data, last night saw the release of the Commonwealth Bank Manufacturing PMI, which rose to 55.7.
Markit commented on the data:
‘Australia’s manufacturers ended 2020 on a strong note, reporting one of the strongest upturns in production since 2018 as order books continued to recover. Many firms even struggled to boost capacity sufficiently to meet the recent surge in demand, despite the sector taking on extra staff at the fastest rate for two years.’
GBP/AUD Outlook: Could a UK National Lockdown Weaken Sterling This Week?
Australian Dollar (AUD) investors will be awaiting tomorrow’s release of December’s Commonwealth Bank Services and Composite data.
Any signs of Australia’s economy recovering would be AUD-positive.
AUD investors will be keeping their eye on Chinese economic developments.
If China, the world’s second-largest economy, shows signs of growth for 2021, we could see the ‘Aussie’ head higher’.
However, if concerns continue to grow over South Africa’s Covid-19 variant, then we could see demand for the risk-sensitive ‘Aussie’ begin to slide.
The GBP/AUD exchange rate could continue to fall this week if Downing Street announces a nationwide Covid-19 lockdown.