The Australian dollar is enjoying further gains against many major currencies including Sterling as the government did not receive a single Coronavirus case over the last weekend. Many beaches including Golden Coast beaches and Bondi beach have reopened as a result. The country had never been especially affected by the virus anyway as it had a total of around 6600 cases and 70 deaths with some of this being attributed to the lower population density the country has which had reduced the ineffectiveness rate which more densely populated nations like the UK could not benefit from. As a result, the midmarket exchange rate between GBPAUD is residing at the 1.95 range. This is down from 2.03 from the start of the month and had demonstrated a near 4% loss for investors holding pounds looking to convert to the Australian dollar.
Further losses could be seen for the British pound as Foreign Secretary Dominic Raab announced an additional 3-week lockdown extension last Thursday. Considering that the UK now has daily death tolls above 800 in worse-hit days, the 16000 total deaths and counting, the continued lockdown may not be such a bad idea for public safety. However, it does still take the economy out of the frying pan and into the fire as the UK furlough scheme has already amounted to £43bn hit and that was before the minimum 3-week extension came into fruition. Additionally, the BBC reports that households may see disposable income fall by £515 into May with the furlough scheme extended until the end of June. The effects of these recession-prompting figures have collapsed 21,000 more businesses than in comparison to March last year giving suggestions from the Office for Budget Responsibility (OBR) that UK unemployment could hit 10% next month with the total UK GDP receding by a startling 35% later this year. Economic slumps this unprecedented are hard to predict but considering how lightly-affected Australia are in comparison to the UK, it can be expected that this continued loss for the GBPAUD rate will continue.
Few boosters that may accelerate this rate movement and its subsequent volatility could come in the UK’s 3-month unemployment rate release tomorrow which could shine some light on the effects the virus had had over the last Quarter. This is followed up with the UK Consumer Price Index on Wednesday suggesting where cost of living, on an increasingly tightened personal budget, could be headed. For Australia, its RBA Meeting Minutes will detail its policy stance and where best to mitigate economic contraction.
Understandably, any data releases which support the regularly updated figures that are indicative of economic contraction will likely lead to further sterling weakness so clients looking to invest in this currency pairing should watch these 3 data releases carefully. You can get in touch using the form below to find out more about the factors likely to impact your currency exchange by using the form below.