Australian Dollar (AUD) Sinks as Risk Sentiment Falls as Covid-19 Cases Rise
The Pound to Australian Dollar (GBP/AUD) exchange rate rose by 0.4% today, with the pairing currently fluctuating around AU$1.76.
The risk-sensitive Australian Dollar (AUD) fell today as demand for the risk-sensitive ‘Aussie’ has dipped on growing concerns over surging global Covid-19 cases.
As a result, the AUD/GBP exchange rate is subdued, with investors seeking out safe-haven currencies like the US Dollar instead.
Added to this, Australian scientists have cast doubt over the efficacy of the AstraZeneca Covid-19 vaccine.
Consequently, this has sparked concerns over Australia’s immunisation program, which plans to rollout 53 million doses of the AstraZeneca jab on Wednesday.
Professor Stephen Turner, the president of the Australian and New Zealand Society for Immunology (ASI) commented:
‘The question is really whether it is able to provide herd immunity. We are playing a long game here. We don’t know how long that will take.’
Any further signs of a lag or delay in Australia’s vaccine rollout would be AUD-negative.
Pound (GBP) Heads Higher as UK Covid-19 Vaccine Rollout Hopes Boost UK Market Optimism
The Pound (GBP) rose today after Priti Patel, the Home Secretary, confirmed that UK Covid-19 rules were ‘tough enough’ despite 1,243 coronavirus-caused deaths.
Priti said:
‘The rules are clear, the rules are firm … the rules are tough enough. The more we follow the rules, the more we can drive this awful disease down.’
As a result, GBP investors heaved a sigh of relief following growing speculations over further lockdown measures and restrictions to limit the spread of the coronavirus.
Sterling has also benefited from Covid-19 vaccine rollout optimism and the Bank of England’s cautious tone about negative interest rates.
Richardo Evangelista, senior analyst at ActivTrades, said that the vaccine programme would help the British economy recover this year.
Evangelista commented:
‘An ambitious, and so far reasonably well deployed, vaccination plan is placing the UK in a privileged position in relation to the EU and the United States in bringing the coronavirus under control and in pole position for the expected post-pandemic economic recovery.
‘In addition to vaccine hopes, the pound is also being supported by the words of Andrew Bailey, as the Bank of England governor talked down the case for further interest rate cuts during a speech made on Tuesday, also highlighting the dangers of adopting negative rates.’
Consequently, demand for the Pound continues to rise as the UK remains one of the forerunners in deploying vaccines.
GBP/AUD Outlook: Could a Speedy UK Covid-19 Vaccine Rollout Boost Sterling?
The Australian Dollar (AUD) will remain sensitive to global risk sentiment this week, with any signs of soaring Covid-19 infections being AUD-negative.
However, if the Covid-19 vaccine rollouts increase across Europe, the US, and China, then we could see demand for the risk-sensitive ‘Aussie’ increase.
The GBP/AUD exchange rate will continue to be driven by the UK’s Covid-19 vaccine rollout.
Any signs that this could meet the target of 15th February would further boost Sterling.
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