December 29, 2021 - Written by John Cameron
STORY LINK Pound Australian Dollar Exchange Rate News: GBP/AUD Muted amid Rising Omicron Concerns
GBP/AUD Muted as Covid-19 Concerns Prevail
The Pound to Australian Dollar (GBP/AUD) exchange rate is trading in a narrow range in the beginning of today’s session despite a risk-on mood amid thin post-Christmas trade and rising Covid-19 cases.
At the time of writing, the GBP/AUD exchange rate is trading at approximately AU$1.8585 with market movement limited by mounting coronavirus concerns.
Australian Dollar (AUD) Subdued in Spite of Risk-On Sentiment
The Australian Dollar (AUD) is trading in a narrow range against the Pound (GBP) this morning despite the risk-on mood.
The risk-sensitive ‘Aussie’ began Wednesday’s session strengthening against its peers but has since started to reverse its gains due to the uncertainty surrounding coronavirus.
The latest coronavirus strain, Omicron, is spreading throughout Australia, and although largely considered less severe than previous variants, is still a threat to the economy.
Concerns over rising Covid-19 cases have offset news the Australian government will ease testing and isolation rules in an attempt to keep more people working.
Queensland has also announced that the controversial rule – the requirement of a negative PCR test before entering the state – has been overruled and will no longer be in effect from the 1st of January.
This is likely to be beneficial to AUD as travellers have easier access to the state. It is also expected to ease the demand shortages of PCR tests currently being experienced.
According to many officials, this rule has been largely a waste of resources due to the length of time it takes to receive a result.
NSW Health Minister Brad Hazzard, said:
‘They might have been negative on day one when they had their test, but they could well be positive on day four or day five when they cross the border.
‘We are still seeing many people in those queues who do not need to be there.’
On Tuesday, Chief Health Officer John Gerrard, backed up this decision by saying that this would allow the PCR tests to be used by those who genuinely require them, such as those who have knowingly been in contact with an infected individual.
‘It [PCR testing] is not contributing in any way to the safety of Queenslanders and that resource can be used better elsewhere.’
Pound (GBP) Mixed amid Increase in Omicron Cases
Meanwhile, the Pound (GBP) is rangebound against the Australian Dollar (AUD) this morning as cases of Omicron increase.
On Tuesday, the number of cases reached 117,093, with just under 10,000 people in hospital. Though this is below January’s peak, it is the highest record of cases since March.
The lateral flow test shortages is likely to also impact the UK’s economy as many sectors are dependent on negative results from customers to maintain consistent business.
This is causing frustration for many industries as well as public health professionals as coronavirus continues to hinder.
However, the home tests are being produced and distributed as quickly as possible according to suppliers.
A spokesperson for UK Health Security Agency said:
‘Despite unprecedented demand, we are continuing to supply millions of rapid lateral flow tests every day. Our total delivery capacity has doubled to 900,000 test kits per day since Saturday 18 December so more people can order tests.
‘During periods of exceptional demand there may be temporary pauses in ordering or receiving tests, to ensure we manage distribution across the system and support changing requirements for LFD [lateral flow device] and PCR tests, and delivery capacity was reduced over Christmas and the bank holiday.’
GBP/AUD Exchange Rate Forecast: Omicron Headlines to Influence GBP and AUD
Looking ahead, the Pound Australian Dollar exchange rate is likely to be impacted by coronavirus developments and market risk appetite due to an absence of data for both currencies over the festive period.
The evolving Omicron situation may dominate market movements as headlines and government guidance continues to change with new scientific research.
Moreover, AUD is a proxy for the Chinese economy and is therefore likely to be influenced by the release of Chinese data during the rest of this week’s session. On Friday, manufacturing and services Chinese PMIs are scheduled to be released, all forecast to slightly increase.
If the data meets expectations, it may weigh on the GBP/AUD exchange rate.
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