GBP/AUD rates have fallen by approximately two cents overnight, following the UK government’s decision to issue a country wide lock-down as fears over the escalating Covid-19 virus continue to mount.
UK Prime Minister Boris Johnson gave a public address last night following an emergency Cobra meeting, in which he stated that all UK households should remain indoors, and only leave under the strictest conditions.
Unless it is for bare essentials like food and water, a medical visit, or a brief period of exercise, the PM has put households lock-down as of immediate effect.
GBP Falters on UK Lock-Down Announcement
The pound, which has already been under increasing pressure this week, saw an instant sell-off, with investors continuing to move their funds away from GBP. Whilst the AUD has been under pressure of late, in part due to Australia’s close trade links with China, it seems as though last night’s announcement by Boris Johnson, has tipped the scales somewhat, with the AUD rallying support and making its biggest single gain against the pound in over a month.
GBP/AUD rates are trading around 1.9650 at the start of European trading, with the pound managing to claw back almost a cent of the losses it suffered overnight, and as such it may be that the government’s attempts to stem the outbreak of the Covid-19 virus have perhaps been seen as a positive in the long-term, as discussed by Michael Gove during his interview on the Kay Burley news show this morning.
The AUD itself may struggle to maintain any significant gains against the pound in the short-term, due to Australia’s intricate trade link with China. A fall in China’s demand for Australia’s exports due to the Covid-19 outbreak has put pressure on the Australian economy, which had a slowdown in economic output, even prior to the virus breaking out.
With the AUD’s status as a commodity-based currency also pointing towards weakness in times of global uncertainty, as history tells us, any significant move back under 1.95 against the Pound, may require further market developments in order to help facilitate it.
Get in touch to find out more about how these factors are likely to impact your upcoming currency exchange by using the form below.