Pound to Australian Dollar Forecast: UK policymakers talk down the Pound

Pound to Australian Dollar Forecast: UK policymakers talk down the Pound

The Pound has suffered losses versus most major currencies over the past 24 hours as hopes for an economic ‘bounceback’ were quashed by Bank of England policy makers.
Bank of England governor Andrew Bailey warned yesterday that the UK would be foolish to reopen the economy too soon as a second wave of coronavirus infections could prove devastating to the economy, “if we had a lifting and then [lockdown] came back again, I think that would damage people’s confidence very severely.” He said that there is work to be done for employers to ensure that offices are safe for staff and that commutes can be undertaken without a risk to health.

Bailey also went on to confirm that he and his team are monitoring the behaviour of UK banks in an attempt to prevent profiting from the Pandemic through higher fees and bulk buying cheaper assets. Drawing on lessons learned from the financial crisis in 2008.

Hopes of a Swift Economic Recovery for the UK Are Dampened
Britain’s economy is unlikely to recover rapidly once coronavirus restrictions are lifted according to Andy Haldane, chief economist for the Bank of England. Pointing to the fact that people are unlikely to socialize and spend as they did before the pandemic the recovery may be more of a stutter than a blast.

With health fears coupled with a hit on income combined he went on to point out that coronavirus only began to impact the UK in March and that his has already led to an economic contraction and that this will mean that the first half of 2020 is “very ugly” indeed.

The Australian Dollar at a Six-Week High

As the panic recedes, the Australian Dollar has been able to improve steadily in value and now trades at a six-week high versus the Pound. Despite warnings from Reserve Bank of Australia governor Philip Lowe of the biggest drop in national output since the Great Depression, the Aussie Dollar has been able to outperform the pound.

This is likely to be linked to the strong trade relationship between Australia and China which will see a return of demand as China reopens for business but also a reflection of the lower national debt in Australia, which despite a significant financial aid package being rolled out to fight the impact of Covid-19 will still only increase this debt by around 6pc.

Now sitting steadfastly below the 2 AUD to GBP rate, the pound has it’s work cut out to see us breach this level again.

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