The pound opens this morning lower still against the Australian dollar as risk appetite continues to return to the market. Having peaked at 2.0852 on March 19th the pound is now trading at 1.9254 – a decline of over 8pc in the past six weeks. Although seemingly disappointing at first glance, these levels are still some of the best trading levels that the pound has seen versus the Australian dollar since the EU referendum in 2016.
For the UK, Prime Minister Boris Johnson’s returns to work today having taken some time off to recuperate from Covid-19 which had seen him hospitalised and in intensive care prior to his release on April 12th. Johnson returns to his post amid mounting pressure to outline the UK’s lockdown easing plan before the official review date of Thursday 7th May. This demand comes as UK deaths in hospital from Covid-19 have now risen to over 20,000.
The Economic Impact of Coronavirus Continues to Be Felt
UK business has been hit hard by Covid-19, with the UK Purchasing Managers Index (PMI) surveys for the manufacturing and services sectors last Thursday reporting a collapse in business. With a figure below 50 signalling contraction, the services sector fell to 12.3, the lowest level recorded since they began over 20 years ago.
With talk of a protracted ‘U shape’ recovery, signalling an oncoming period of recession for the UK, Ben Broadbent, Deputy Bank of England Governor also struck a heavy chord stating that the 35% contraction in the British economy, as predicted by the Office for Budget Responsibility, “did not seem unrealistic”.
Australia Keen to See Lockdown Restrictions Eased
With less than 100 deaths currently reported in Australia pressure is mounting from the Public to ease the lockdown restrictions. Having implemented travel restrictions very early on, the governments response to the threat of Covid-19 has been hailed as significant and successful in protecting the public. Similarly to Germany, widespread testing for the virus has meant that there is a clear picture of the virus and they have been able to stem the spread effectively by testing all people presenting symptoms regardless of how mild they may be.
There will be a lasting impact on how we all behave and interact in the future with Chief Medical Officer Brendan Murphy told reporters this afternoon the way Australians physically interact would be very different in the future – perhaps even permanently. “Even if we relieve restrictions in the future, people need to change the way they interact permanently. Permanently,” he said.
As the World continues to navigate the impact of Covid-19 both on health and the economy, exchange rates will continue to reflect the mood of the world. At this point the move in the Pound dropping lower versus the AU Dollar is a response to the current battle being faced in UK hospitals which is currently much more significant that the one in Australia. How this progresses, only time will tell.
For more information on factors influencing GBPAUD exchange rates for an upcoming currency transfer, feel free to contact myself, Lauren Buckner, using the form below.