The AUD to GBP exchange rate was 0.65% higher on Tuesday after the UK was plunged into another full lockdown. Prime Minister Boris Johnson made the announcement on Monday evening and the news has hit the pound sterling across the board.
The currency outlook is being balanced by Australia’s own struggles with the virus as New South Wales sees further restrictions.
AUDGBP was trading at 0.5680 and is looking for a move to the December highs of 0.5736.
Brexit Fails to Boost Pound as Lockdowns Return
The approval of a Brexit deal had very little effect on the British currency and sterling starts the year with the pressure of yet another lockdown.
Prime Minister Boris Johnson has plunged the UK back into a full lockdown immediately and it is expected to continue until mid-February. Johnson said he had no choice but to close schools and non-essential businesses after another virus spread in the country. Scotland’s First Minister Nicola Sturgeon has also pushed the country into another lockdown.
British businesses are now pressing the government for support in order to fend off further job losses and closures. Chancellor Rishi Sunak is being urged to extend the furlough program and also look for other ways to support hard-hit sectors.
The British pound was under pressure throughout 2020 due to Brexit and a big spread of the virus and with Brexit out of the way the currency is seeing little respite from the virus.
Aussie Struggles Balance the AUD to GBP Outlook
The Australian dollar has been strong against the pound but this could have been a more pronounced move if it wasn’t for the Aussie’s own struggles with the virus.
Further restrictions were placed on the country’s most-populous state New South Wales after a rise of the virus in Sydney. The same sectors are being hit with real estate, industrial and tourism-related stocks taking a hit in trading as the year got underway.
Risk assets are seeing selling as the US awaits a dual run-off election to see which party controls the Senate. Markets are expecting Republicans to hold at least one of the seats. However, if the Democrats pick win both, then there could be a higher risk of increased regulations and higher taxes. Oil has sold off from near $50 to around $47 and a hit on commodities could weigh on the Aussie currency if the move extends further.
The UK and Aussie economies are seeing little on the economic calendar this week but services Purchasing Manager’s Index (PMI) will be released for Australia this evening and tomorrow will see the same release from the UK The British economy has seen its services sector hit hard from the virus spread and this is a major part of the UK economy.
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