Throughout last week, GBP remained on the front foot against AUD. The pound rallied against the Aussie in the early week as the coronavirus fears remained firmly placed on the markets. Into mid-week, markets began to stabilise as central banks across the world pledged to provide support through fiscal stimulus and other means in order to aide the economic effects of the coronavirus. Towards the end of the week, the UK announced a move to the ‘delay’ phase in the response to the COVID-19 outbreak, which saw the GBPAUD rate remain volatile. Heading into the new week, the focus will remain on the coronavirus and the global containment efforts. The UK could be forced into stricter measures to help slow down the spread of the virus, which would see an upswing in support for GBP. The week is also littered with economic releases which could offer either currency a chance to boost over its counterpart. The UK will see its labour market statistics, while Australia will observe its Reserve Bank of Australia (RBA) meeting minutes and the Australian employment statistics for February which could see shifts in the exchange rate pairing.
Volatility induced by coronavirus affected GBPAUD rates last week
The GBPAUD interbank exchange rate rallied on Monday following a flock to safe haven currencies for investors, as the virus fears weighed on markets. Oil prices also slumped in the early week, falling by 30% as Saudi Arabia pledged to cut oil prices and boost production. This came after an OPEC+ meeting could not come to agreed terms on reducing oil production to lighten the load for the offsetting of the coronavirus damage. The increased tensions caused the GBPAUD exchange rate to break through the AU$2.0 mark for the first time in nearly 4 years. AUD remained on the back foot into Tuesday after data from National Australia Bank (NAB) revealed that business confidence continued to slump in February, slipping to the lowest level since July 2013.
Into mid-week, markets began to slowly stabilise as policymakers across the globe injected a ray of confidence by pledging to introduce a coordinated stimulus to help offset the global economic effects of the coronavirus. Wednesday saw the Bank of England drop their interest rates by 50bps, following suit of the US Fed Reserve, this lowered GBP and helped the Aussie dollar. Meanwhile, following the cut, the UK government announced a £30 billion stimulus plan in response to the outbreak which helped lift GBP’s spirit. But the UK government’s announcement of moving into the ‘delay’ phase at the end of the week saw some movement in the GBPAUD exchange rate to end the week, the lack of strict measures imposed by the government disappointed markets and weighed heavy on the pound.
Coronavirus to remain the top headline for GBPAUD
Looking ahead to the new trading week, the coronavirus is nailed on to be the top topic of the week. GBP investors will be hoping that the UK government imposes stricter measures to stop the spread of COVID-19 in the UK, which would give the pound some support. Meanwhile, AUD investors will be waiting for the meeting minutes from the Reserve Bank of Australia (RBA) on Tuesday, on dovishness will see AUD slump. There will also be economic releases for both nations throughout the week which could help boost either currency provided that results return positive values.
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