AUD to GBP Hit by Vaccines and Rising Bond Yields

AUD GBP Higher Despite Higher UK GDP Number

The AUD to GBP exchange rate was lower by 0.16% and heading for a third-straight day of losses. The Aussie dollar has been hit by Italy’s block of 250k vaccines to the country, while rising bond yields have also hit commodities.

AUDGBP is trading at 0.5550 on Friday with strong support 50 pips below this level.

Aussie PM Downplays Vaccine Italy Block

Australia’s prime minister Scott Morrison has played down the recent decision by Italy to block the export of 250,000 AstraZeneca vaccines to the country.

The PM insisted that the blocked delivery was understandable amid cries of “vaccine nationalism”.

“This particular shipment was not one we’d counted on for the rollout, and so we will continue unabated,” Morrison said.

Italy is the first nation to trigger a rule change from the EU where shipments can be stopped if a manufacturer falls behind their promised delivery levels. The situation in Italy pales in comparison to Australia’s zero cases but it does bring the Australian rollout into question and the Aussie dollar was lower.

Rising Yields Hit the Aussie to Pound Outlook

After the recent rise in inflation expectations and bond yields, markets were clinging to a speech last night from Federal Reserve Chairman Jerome Powell. The American central banker was expected to announce new changes to the current stimulus measures in the country and he disappointed.

In a virtual event hosted by the Wall Street Journal, Powell said the bank were happy with their current stance and also said that any inflation would be temporary.

This has seen yields rising in the US 5 and 10-year bonds again, while the spread on Australian bonds has risen over their US and European counterparts. Stock markets have also seen selling with the Australian ASX market down 0.75% and gold was trading under $1700, which both weighted on the Aussie dollar due to its status as a “risk” and commodity play.

The pound could also be seen as a safe haven play now that it has untangled from the European Union’s web. This could see big moves in the AUDGBP pair if the bond situation worsens.

The economic calendar is light for the week ahead with the Westpac Consumer Confidence being the only big-ticket data for the pair next week. The exchange rate will trade on the action in US markets today with the latest Non-Farm jobs release providing an update on the American economy.

The market will also have a chance to position ahead of the weekend in light of the Fed Chair’s comments on bonds. The Aussie dollar could remain under pressure until a large central bank commits to further stimulus action. Get in touch to discuss these factors in further detail ahead of your upcoming currency exchange.