When the Coronavirus was first publicly announced back in December, the GBP/AUD exchange rate was sitting typically within 3 cents both sides of the 1.90 level on mid-market. Since that point in time, albeit with numerous fluctuations in both directions, that rate has now surged above the 2.00 resistance level to its current 2.01 some 3 months later. However, the volatility that these two currency pairings have seen has extended up to a momentary day-high of 2.068 just 8 days ago having made it the best time to buy Australian dollars with pounds in over 4 years since the start of 2016.
Coronavirus Replace Brexit as the Main Driver for GBP/AUD Rates
This 5.8% gain can mainly be attributed to the COVID-19 developments as the previous driver for sterling exchange rates – Brexit – has been put to one side as Boris Johnson and his government find a way to ease the social impacts of the virus now that the country has experienced another 100-death day just yesterday.
Few other factors will be expected to significantly affect the GBP/AUD rates other than a suite of economic data out for the UK as yesterday, newly appointed Andrew Bailey who overtook previous governor Mark Carney and as also expected, has kept interest rates at a record 0.1%. The next scheduled Interest rate decision will be on the 7th May. In addition to this statement were the accompanying Asset Purchase Facility and the Monetary Policy Summary.
UK GDP Expected to Fall by 10%
More fiscal measures may be added to stimulate the economy amongst predictions that UK GDP figures could fall by 10% this Quarter which dwarfs the 2008 financial crisis by two-fold. The £645 billion announced for Quantitative Easing (QE) policies have come in the form of bond purchasing schemes alongside the recently implemented 80% monthly pay financial packages for the self-employed to reduce the pressure on workers whose livelihoods have been put on hold.
Given that over the last few days the GBP/AUD rate has been relatively unchanged and the fact that there have been some drastic measures introduced by the UK, it may be considered that the currency market has yet to bake-in these decisions into the rates of exchange. Therefore, there is the continued possibility of seeing further rate fluctuations on volatility in the upcoming week alongside long-term movements as the Coronavirus is yet to be contained or a vaccine implemented.
For more information on AUD or GBP exchange rates for an upcoming currency transfer, feel free to contact me directly, Ben Fletcher, using the form below.