September 15, 2020 - Written by John Cameron
STORY LINK Pound to Australian Dollar (GBP/AUD) Exchange Rate Dips as Covid-19 Vaccine Hopes Buoy Risky Assets
GBP/AUD Exchange Rate Falls as ‘Aussie’ is Buoyed by Hopes of Coronavirus Vaccine
The Pound to Australian Dollar (GBP/AUD) exchange rate fell by -0.3% today, with the pairing currently trading around AU$1.75.
The Australian Dollar (AUD) has benefited from risk-on markets today after Chinese senior heal officials revealed that it is possible for Chinese citizens to receive Covid-19 vaccines as early as November.
Wu Guifen, chief biosafety expert of China's CDC, commented:
‘It would be about November or December. Ordinary people can be vaccinated with the vaccine, because according to its phase III clinical results, the current progress is proceeding very smoothly.’
Consequently this has provided a boost for the risk-averse ‘Aussie’. With China being Australia’s largest trading partner, a Covid-19 vaccine for Chinese citizens bodes well for Australia’s struggling economy.
Furthermore, China also showed signs of shrugging off the global slump as Chinese retail sales up by 3.36 trillion yuan in August, a 0.5% increase in 2019.
Fu Linghui, a spokesman for National Bureau of Statistics, said:
‘The job market has stabilized, and travel restrictions have loosened. People are more willing to come out and spend.’
In Australian economic news, today saw the House Price Index for the second quarter fall below forecasts from 1.6% to -1.8%. Consequently, this has sparked some concern for Australia’s economic strength in the months ahead.
Pound (GBP) Sinks despite Growing Pressure against Controversial Brexit Bill
The Pound (GBP) failed to gain against the ‘Aussie’ today despite growing opposition to Downing Street’s Brexit Internal Market Bill, which passed by a comfortable margin of 77 in last night’s Parliamentary vote.
As a result, Sterling traders are fast becoming more hopeful that Downing Street will avoid a hard Brexit on December 31st. If opposition to the bill continues to grow, then we could see the GBP/AUD exchange rate head higher.
In UK economic news, today saw the release of July’s Unemployment Rate confirm consensus and rise from 3.9% to 4.1%. This has sparked concerns for Britain’s economy in the months ahead, with unemployment continuing to rise as the Covid-19 crisis continues.
UK Finance Minister Rishi Sunak commented:
‘This is a difficult time for many as the pandemic continues to have a profound impact on people’s jobs and livelihoods. That’s why protecting jobs and helping people back into work continues to be my number one priority.’
GBP/AUD Outlook: No-Deal Brexit Fears to Weigh on Sterling
Australian Dollar (AUD) investors will be looking ahead to tomorrow’s release of the Australian HIA New Home Sales report for August. If this confirms consensus and rises by 79.6%, then we would see the ‘Aussie’ continue upward against the Pound.
Global economic developments will also remain in focus. So, any further indications that China – the world’s second-largest economy – could further its recovery would prove GBP-positive.
The GBP/AUD exchange rate will be influenced by the direction of the UK’s Brexit developments. As a result, Sterling will likely remain under pressure as no-deal fears continue to haunt UK markets.
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TAGS: Australian Dollar Forecasts Pound Australian Dollar Forecasts