The AUD to GBP exchange rate has continued to climb since the 3rd April with rates moving swiftly from 0.48 to the current 0.55 with no signs of stopping. Aspects of this rise could be attributed to the UK’s two-front assault emanating from being the 3rd worst virus-hit nation bolstered by political detriment from the ongoing Brexit negotiations coming back into the picture. With the current deadline set for the end of this year, many analysts have suggested that a trade deal is not possible in the remaining time left and with only two weeks to go before the extension deadline, UK PM Boris Johnson has repeatedly said he is not looking to extend Brexit into next year. This pressure on Sterling could weaken the currency and improve the Australian dollar forecast point to further inroads by the AUD.
From an AUD to USD angle, a similar pattern has ensued with 23rd March seeming to be the key date to which the Australian currency has started making consistent inroads against the safe-haven US dollar. The strengthening currency pair has certainly not showed linear growth but has been relatively resilient in the last few months considering that, as a commodity currency, its value tends to be highly sensitive and fluctuate in accordance with the amount of investor confidence and market sentiment to which have been relatively poor in these unprecedented times. The USD weakness experienced recently could be a sign of changing times as we are no longer at the very peak of the pandemic. Whilst the numbers of deaths, for the time being at least, is still increasing, daily cases are down in the majority of countries and so the reduced state of panic and uncertainty has eased which meant that the USD, which investors tend to buy in uncertain times, has now dropped off slightly.
“Malicious” Cyber-Attack Hit Australia
The recent news came in that the antipodean nation had fallen victim to a multi-scale digital attack that had impacted a multitude of sectors ranging from governmental, financial, political systems and other essential infrastructure. Whilst it is still unclear as to who was behind the attack, there have been claims that China could be involved owing to the highly sophisticated nature alongside their previous disputes over the considered boycotting of Australian goods and services stemming from the Coronavirus outbreak.
Australian PM Scott Morrison has placed the country under a state of alert as these so-called “cyber bombs” had been suggested to have potentially long-lasting damaging impacts to the digital world for which Australia heavily relies on. Although the currency market has since not reacted to these latest developments, should the impacts of the attack worsen there could be implications on AUD exchange rates moving forwards.
RBA Governor Lowe Announcements this Weekend
Next week will be quiet for Australian economic data as Sunday marks the only announcement for Australia which could have any significant impacts on the exchange rates. Australian Central Bank governor Philip Lowe speaks this weekend to discussion the financial outlook for the rest of this year. Australia has been severely impacted by the COVID-19 outbreak and its governmental prompts for investigations into China for the initiation of the virus has created tension between the neighbouring countries as China had threatened to purchase goods such as meat and wine, which are large exports for Australia, from other countries if it did not ease off on interrogating China. Now the potential for cyber attacks threatens them additionally and puts Australia in a difficult situation from an economic viewpoint. Therefore, there could be the potential for market volatility for the AUD if the speech sets in motion unexpected plans in fiscal policy or a monetary policy stance.
To keep on top of the latest market developments, get in touch by using the form below or giving your account manager here at Foreign Currency Direct a call.