March 24, 2021 - Written by John Cameron
STORY LINK GBP/AUD Forecast: Pound to Australian Dollar Rate Falls Despite Prevailing Risk-Off Mood
GBP/AUD Exchange Rate Sinks Despite Growing Tensions With China
The Pound Australian Dollar (GBP/AUD) exchange rate fell by -0.2% today, with the pairing currently fluctuating around AU$1.80.
The risk-sensitive Australian Dollar (AUD) suffered today following rising concerns over the AstraZeneca vaccine raised by US regulators.
As a result, this has dampened confidence in a global economic recovery and weakened demand for the risk-correlated Australian Dollar.
Thomas Westwater, an analyst for DailyFX, comments:
‘Concern over the global economic recovery ramped up on Tuesday, causing a risk-off move to vibrate through markets as the global Covid-19 rollout hit a road bump. The National Institute of Allergy and Infection Diseases announced that AstraZeneca's disclosures may have included outdated data after receiving information from the company's independent data-monitoring board.’
This week also saw tensions between several Western powers – including the EU, US, and the UK – escalate with China over human rights abuses in Xinjiang.
With China being Australia’s largest trading partner, this has weakened the Australian Dollar.
However, recovering risk sentiment has driven up the AUD/GBP exchange rate today, as UK markets are becoming more cautious.
Pound (GBP) Exchange Rates Fall Despite Rising UK Business Activity
The Pound (GBP) failed to gain against the ‘Aussie’ today despite UK business activity rising at its fastest level since August last year.
Today also saw the release of the flash UK Services PMI figure for March, which emerged out of contraction territory and rose to 56.8.
Duncan Brock, the Group Director at CIPS, commented on the report:
‘It’s good to see the sectors out of contraction and the economy as a whole returning to growth in March but the fastest pace of cost inflation since February 2017 will be a cause for trepidation. The boost in employment numbers is also encouraging, but the sectors have a lot of catching up to do to meet the demands of the fastest rise in backlogs since June 2018.’
However, this week’s news of growing Covid-19 cases in Europe has dampened confidence in the UK economy.
Earlier this week Prime Minister Boris Johnson warned that rising numbers of the virus in the EU could wash up in Britain, threatening the planned reopening on the economy.
GBP/AUD Outlook: Could Improving Risk Sentiment Boost the ‘Aussie’ This Week?
Pound (GBP) traders will be awaiting tomorrow’s speech from the Governor of the Bank of England (BoE), Andrew Bailey.
Any upbeat comments about the outlook for the UK economy, however, would be GBP-positive.
The GBP/AUD exchange rate could remain subdued, however, if confidence in a global economic recovery makes a return on any breakthrough mass approval of the AstraZeneca Covid-19 vaccine.
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TAGS: Australian Dollar Forecasts Pound Australian Dollar Forecasts