Australian Dollar Flat Versus the Pound as Support Hints of a Potential Bounce

Australian Dollar Flat Versus the Pound as Support Hints of a Potential Bounce

The Australian dollar was flat on the day against the British Pound with a tiny loss of 0.03% later in the European trading session.

The AUD v GBP pair was trading at 0.5002 and this is the fifth-straight close above the 0.5000 round number which is a hint that a catalyst of some form could arise to produce a bounce in the Aussie next week.

Global markets are trying to bounce from recent panic

Stocks in the US were up close to 3% on the day and the Australian market has recovered well with a 10% move higher, whilst the UK has underperformed with a bounce of only 1%. Oil has stabilized from the early week panic move lower and this has helped the commodity-driven Australian stocks and its currency.

We noted recently that the markets may be underestimating the effects on Europe’s economy as traders have been fixated on interest rate differentials and have beaten down the Australian dollar but China has only seen 22 new cases today, in comparison to 1,188 in Spain, and 208 in the UK with fears spreading around over a lockdown in other nations and entertainment events being cancelled. If Europe’s nations can’t control the virus then a drastic re-pricing may happen in their currencies versus the Australian dollar.

A quiet economic week will see current trends dominate

A quiet week on the economic calendar will see the current trends continuing in the AUD to GBP currency rate and a hold of the 0.5000 level this week could provide a welcome relief for Aussie dollar bulls.

The next key event for the currency pair is not until Thursday, which sees the release of Australian employment figures and this has been a closely watched figure for the country’s Reserve Bank as a driver for interest rate cuts or stimulus measures. As noted yesterday, Westpac expected a 0.3% decline in the Aussie economy for the first two quarters of the year but that was based on a “no stimulus” stance. If the employment figure comes in below expectations, then we could see further losses in the Aussie currency. A stronger number would remove the talk of stimulus in the near and could see the currency strengthen.

For more information on AUD exchange rates for an upcoming currency transfer, you can contact myself, Matt Vassallo, using the form below.