The Australian dollar has strengthened considerably against sterling throughout April, and this trend continued yesterday as Australia announced just 4 new cases of Coronavirus and a ‘flattening of the curve’ in their fight against the virus.
Speaking yesterday, Australian PM Scott Morrison was extremely upbeat regarding the current situation there and how it is being handled stating, “We are on the road back and I think we have already reached a turning point.” He also said that Australia could begin to relax some restrictions as early as next week and that schools are likely to open next month.
This puts the Australian recovery from the virus, and therefore potentially the economic recovery of the country, ahead of many European countries and the US. As a result, if the economy can kickstart sooner than other nations, this could strengthen AUD against sterling.
GBP Weakens as Coronavirus Death Rate Breaches 18,000
The picture was very different in the UK yesterday, where Coronavirus deaths breached 18,000 and members of Parliament challenged the government’s response to the virus. This has seen the pound under increased pressure. Labour leader Keir Starmer led an assault of questions on Dominic Raab, standing in for PM Boris Johnson, stating, “There’s a pattern emerging here. We were slow into lockdown, slow on testing, slow on protective equipment, and are slow to take up these offers (to supply equipment) from British firms.”
Further weakness was piled on to the pound yesterday morning after inflation data for March showed a fall to 1.5% amidst a fall in clothing and fuel prices due to a lack of demand in the current climate. In response to this data release, economists have warned that inflation could fall to 0.5% in 2020 due to the shrinking of the economy.
Clients with an imminent AUDGBP requirement should keep an eye on UK retail sales figures for March due to be released on Friday morning. The expectation is for a significant drop, which could cause GBP weakness. Get in touch using the form below if you’d like to discuss these factors and the impact they’re likely to have on your upcoming currency exchange.