September 8, 2021 - Written by John Cameron
STORY LINK GBP/AUD Exchange Rate Steady as UK Markets Confidence Dips on ‘Firebreak’ Lockdown Rumours
GBP/AUD Exchange Rate Rangebound as ‘Firebreak’ Lockdown News Dampens UK Economic Confidence
The Pound Australian Dollar (GBP/AUD) exchange rate is rangebound today with UK markets concerned about the possibility of a ‘firebreak’ October lockdown, should Covid-19 infections and hospitalisations remain high next month. The pairing is currently trading around AU$1.86.
However, the UK Department for Education, claimed that it was ‘not true’ that the Government was ‘planning a lockdown or firebreak around October half term’.
Pound investors have remained cautious, however, with hospitalisations and infections continuing to rise across the country.
Nadhim Zahawi, the vaccines minister, said:
‘[T]he vaccines have actually allowed us to reach an equilibrium with the virus in the sense that they have prevented over 100,000 deaths, many, many millions of infections and of course hospitalisations as well.’
‘The upward pressure on infections is as, obviously, we have reopened the economy to pretty much as close to normal as you can get.’
In absence of UK economic data today, Sterling investors are instead monitoring Covid-19 developments.
Any indications of rising daily cases or hospitalisations could further spark-off fears of a possible lockdown next month, and drag down the Pound Australian Dollar exchange rate.
Australian Dollar (AUD) Exchange Rate Steady, Global Risk Sentiment Sours
The Australian Dollar (AUD) had its gains softened this week as souring global risk sentiment has driven away investor demand for the risk-averse ‘Aussie’.
Added to this, Western Sydney is to remain in a harsh lockdown, while the state of Victoria is to see a ‘ring of steel’, as Covid-19 cases rise throughout key parts of Australia.
Prof Catherine Bennett, the chair of epidemiology at Deakin University in Victoria, said:
‘As we move into suppression mode with higher rates of the population fully vaccinated, we will no longer need to find every case. This is among the many shifts in approach that will shape our transition by early 2022 to living with – and controlling – the disease.’
‘Uncontrolled community transmission as we enter spring was not in the plan. The Delta variant has usurped one important decision we thought was in our control – when we would let the virus in.’
Nevertheless, with Australia taking such a strict zero-Covid policy, Australian Dollar investors have become notably skittish when it comes to the outlook for the nation’s economy.
As a result, the AUD/GBP exchange rate has remained steady, with high levels of uncertainty for the Australian economy limiting the appeal of the ‘Aussie’.
Pound Australian Dollar (GBP/AUD) Exchange Rate Forecast: RBA Speech in Spotlight
Australian Dollar (AUD) investors will be awaiting tomorrow’s speech from the Reserve Bank of Australia’s (RBA) assistant governor, Guy Debelle.
Any dovish comments about the state of the Australian economy would prove AUD-negative.
However, risk sentiment will continue to drive the AUD/GBP exchange rate. Could rising fears over new Covid-19 variants further sour risk sentiment and drag-down the ‘Aussie’?
Pound investors will continue to monitor the UK’s Covid-19 situation. If hospitalisations rise, then fears of a lockdown in October could further limit the GBP/AUD exchange rate.
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TAGS: Australian Dollar Forecasts Pound Australian Dollar Forecasts