GBPAUD Rate: Johnson’s Health Key to the Pounds Performance as RBA Hold Interest Rates

GBP AUD Lower as UK Employment Data Awaits

The pound continues to struggle following the news on Monday evening that Prime Minister Boris Johnson was moved into intensive care. Johnson’s health is important to the pound as he is seen as a competent and decisive leader who has been a guiding light to the UK during this pandemic. Following his third night in hospital he is believed to be responding well to treatment.

Whilst the PM remains out of action it is business as usual for the government and Dominic Raab will chair today’s cobra meeting where current lockdown measures will be discussed. Johnson’s recovery is needed to help buoy the pound at this point.

Sterling Drops Back Below the 2.00 Mark

Now sitting at an eight day low, the pound versus Australian dollar rate is also being pulled lower by an influx of capital into Australia. Investors have been encouraged to head to the AUD following the recent Reserve Bank of Australia (RBA) meeting where interest rates were kept on hold. Having cut rates at an emergency meeting earlier in the month (the first such move since 1997) the market was pleased to hear that interest rates are predicted to remain here for some time.

Pressure is mounting on the RBA at this time to offer further support to the Australian economy as it feels the shock from the spreading coronavirus pandemic. As stock markets continue to decline, 28 of the country’s biggest companies have been forced to withdraw their profit forecasts amid the crisis and Qantas airlines has placed 20,000 of it’s 30,000 staff members on unpaid leave. This uncertainty for the economy means the outlook is rather gloomy for the Australian economy. The RBA has begun quantitative easing through buying government bonds on the secondary market in order to keep three-year bond yields at 0.25%, and also provided $90bn worth of low rate loans for banks to offer to small-medium businesses. It remains to be seen if this will be enough support at this time.

Is There Hope for Australia From China’s Recovery From the Virus?

A glimmer of hope can be seen perhaps as China emerges from the coronavirus pandemic to return to business. The main importer of Australian mining exports to support it’s manufacturing industry a return in demand as China begins to lift its lockdown restrictions. Fears that demand however, for Chinese goods will remain low as the rest of the globe deal with the outbreak of coronavirus still threatens the Australian dollar’s value and could signal further breaks through the 2.00 mark for sterling.

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.