The AUDGBP exchange rate was able to reverse a Thursday close at 2021 lows with a bounce ahead of the weekend. The Aussie dollar will now look for buyers to recover the recent losses or the Pound will push for a breakout of the recent stubborn range.
AUD to GBP trades at 0.5537 with 0.5500 being the obstacle for a new sterling trend.
Virus Rears its Head in Brisbane, Aussie Cabinet Reshuffle
Authorities have announced a three-day virus lockdown in the northern city of Brisbane from today, as officials attempt to stamp out an outbreak of the coronavirus. Around 2 million residents will be asked to stay home from 5 pm unless its for essential work, such as healthcare, food shopping or exercise.
The news led to further action in other states with Victoria putting Brisbane on its red list, while WA introduced a hard border with Queensland. The Australian lockdown is coming after two cases of the virus were detected in a Brisbane pub and the harsh efforts of the government could hamper Australia’s recovery this year as the vaccination rollout is not expected to be complete until October. The country is also moving out of its summer season and could see Autumn and Winter vulnerability, while the UK will be in Summer. This outlook could boost the Pound versus the Aussie dollar in the coming months if the UK gets reopened on schedule.
Authorities claim that social distancing, snap lockdowns and contact tracing has helped Australia contain the virus, although these measures have been implemented in months’ long lockdown across the world.
Australian Prime Minister has also announced a cabinet reshuffle today after the nation’s chief law officer was removed over misconduct accusations.
Politics Could Drive the AUDGBP This Week
The week sees little data on the economic front for the Australian and UK economies. Some PMI and trade data will come from both sides and the virus and political statements are more likely to drive the week in the currency pair. The pound was boosted by the unemployment rate dipping last week to 5%, while traders are nervous that New Zealand’s efforts to curb housing speculation will be copied in Australia.
The UK is still on track to reopen its economy more quickly than Australia and this should support the pound. Sterling bounced at the end of the week after signing an agreement with the EU on cooperation in the financial sector, which will remove some of the risk over financial competition between the sides. Britain’s status as a key financial hub needs to be protected if it is to remain competitive on the world stage.
AUDGBP has traded much of the year in a tight range between 0.55 – 0.5600 but the pound has inched lower in the last week with new yearly lows. That saw Aussie bulls coming to the rescue but there should be a catalyst for a longer-term path developing soon.
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