AUDGBP Exchange Rate Rises After COVID Cases Fall

AUD GBP Mixed as Central Banks Feel the Heat

Whilst many other major economies are reporting a rise in Coronavirus cases at present, yesterday saw Australia record the lowest one-day rise in new cases in 3 months and the first day without any COVID related deaths in two months. This positive news helped the AUDGBP, AUDUSD and AUDEUR rate strengthen against throughout yesterday’s trading and has provided a boost for any clients in the process of selling Aussie dollars.

Lockdown Measures to be Lifted in Victoria, Strengthens AUD

With the fall in the number of cases and renewed confidence that a second wave of the virus have been contained, AUD gained in value after Victoria State Premier, Daniel Andrews, confirmed that social distancing and restriction measures across the state would start to be relaxed this week. Speaking to reporters, Andrews stated, “We have driven case numbers down to very low numbers in regional Victoria. That’s taken some time. We stayed the course and now we can open up. That should be something that I think inspires confidence and a real sense of hope that the same thing can be achieved to the best of our ability across metropolitan Melbourne.”

Whilst there are fears in other nations of a second wave of the virus hitting and the impact this could have in a return of restriction measures, Australia’s move in the opposite direction could have a positive impact on the value of AUD moving forward.

How will Australian Employment Data Affect AUD This Week?

Tomorrow could prove to be a significant day for AUDGBP with the release of the latest employment figures for August in the early hours of the morning. with the country in a deep recession, the labor market has been extremely negatively affected by the current crisis and with the most populous state of the country, Victoria, having tight restriction measures throughout August it is likely that the numbers tomorrow will continue to disappoint. The previous figures showed a sharp decline and there have been estimates that unemployment across Australia will reach over 13% by the end of September. Any clients with an AUD requirement should keep a close eye on this data release tomorrow morning as it is likely to have a direct impact on AUD exchange rates.

Interest Rate Decisions From the Fed and BoE This Week

This week also sees interest rate decisions from the Federal Reserve Bank (Fed) in the US and the Bank of England (BoE) that could impact AUDGBP and AUDUSD. The Fed release their decision this evening at 18.00 GMT and are widely expected to keep rates on hold at their current low of 0.25%. However, there are many expectations ahead of the event that their economic forecasts for the future will paint a brighter picture moving forward. Comments from the Fed will be watched closely by investors throughout the evening and are likely to create significant USD volatility.

Meanwhile the BoE is due to release their latest rate decision tomorrow morning and are also expected to keep interest rates on hold at their record low of 0.1%. The decision tomorrow has been preceded by news this morning that UK inflation fell sharply in the month of August as a result of the cheaper eating out offered by the government’s Eat Out to Help Out scheme. There were fears that there could be deflation in the economy, but the latest figures see inflation at 0.2% and someway below the Bank of England’s target of 2%.

Other data that could have an impact on exchange rate volatility this week include inflation data for the Eurozone, which similarly to the UK, are likely to show a fall given the current climate. Jobs data from the US is released on Thursday and similarly to what we have seen in Australia, the labor market has had to overcome significant hurdles as a result of COVID lockdown measures. The initial expectations ahead of the event are that there will be a continued rise in the number of people filing for unemployment in these latest figures and this could cause some market movement.

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