AUDGBP has started the week off with a fall, following the state of Victoria announcing their highest daily increase in infections to date. As a result, there are fresh fears of lockdown measures already in place being extended and/or tightened, which is likely to see economic downturn continue. As such clients with an AUDGBP are seeing some of the best levels to do so over the past month.
One of the major reasons being cited as the cause for the upturn in infections is that people are continuing to go to work even if they are feeling unwell. Victorian Premier, Daniel Andrews said in a televised conference yesterday, “If you’ve got a sniffle, a scratchy throat, a headache, fever, then you can’t go to work. This is what is driving these numbers up, and the lockdown will not end until people stop going to work with symptoms and instead go and get tested because they have symptoms.”
Australia had managed to control the virus in the early stages of the spread well compared to many other nations, particularly across Europe and in the US. As such we had seen AUD perform well against many majors during the period between March-June. However, with lockdowns being imposed and fears that this could spread to other states, the economy is likely to suffer further, and this would weigh on AUD value.
How Will This Week’s Data Affect AUDGBP Exchange Rates?
Looking ahead this week to data being released from Australia and Wednesday could have a significant impact on Australian Dollar exchange rates, with the release of inflation numbers for Q2 of this year. The initial expectation is that there will have been a significant YoY drop in the value of goods and services, mainly from the effect of the Coronavirus pandemic and how this has affected consumer confidence and spending. These numbers will be closely watched by the RBA and Governor Philip Lowe who have their next monetary policy meeting and press conference next week.
Interest rates are currently at record lows in Australia and it is unlikely that they will drop further, but the RBA may announce measures next week as to how they will tackle a low inflation rate, if that is indeed the case tomorrow. Already strategists believe that the RBA may use next week’s press conference to help artificially weaken AUD in order to make their exports cheaper, which could in turn help boost inflation. Speaking last week, a strategist at Rabobank stated, “We remain cautious about the outlook for the AUD on a 3-month view. With one eye on the currency, it is possible that RBA Governor Lowe will use the August 4 RBA meeting to sound a more dovish tone.”
These two events are likely to cause AUD volatility and could therefore have a big impact on your finances if you have an upcoming AUD transfer to make. Speaking with our team of experienced traders in advance of these events could help you prepare for how AUD will be affected.
Brexit Stalemate Continues to Weaken GBP
Other factors likely to have an impact on GBPAUD exchange rates in the coming week include progress with the UK and EU on a free trade agreement before the end of this year. At the end of last week, the Pound weakened against most majors on the back of comments from the EU that they felt a free trade agreement being met was “unlikely”. Every time this has been the case, we have seen the Pound weaken and until there are positive steps towards an agreement, it is likely the Pound will continue to suffer. Yesterday however, Reuters reported that sources close to Michel Barnier have stated that he is confident a deal can be reached on fisheries and a level playing field guarantee. Brexit negotiations are set to continue next month and are likely to be significant in during the short-medium term value of GBP.