GBP/AUD: Aussie Declines on Fears of Virus Outbreak

GBP/AUD inches up on Tuesday, trying to break the resistance line that coincides with the peak of last week. Currently, the pair is trading at 1.8966, up 0.22% as of 6:35. If it manages to break the resistance later this week, the quotation might be aiming for updating the monthly peak that was touched on January 7.

The Aussie is declining amid fears that a new strain of coronavirus in China could rapidly spread and damage the economy. Chinese authorities confirmed the fourth death in the city of Wuhan, saying that over 200 people were infected with the virus, which can cause a type of pneumonia. The virus was also reported in Thailand, South Korea, and Japan.

Australia will start screening passengers coming from Wuhan in an attempt to prevent the spread of the virus, the chief medical officer said earlier today. However, authorities admitted that an outbreak would be difficult to stop. The official told reporters:

“You cannot absolutely prevent the spread of disease into the country. The incubation period is probably a week. It’s about identifying those with a high risk and making sure those who have a high risk know about it and know how to get medical attention.”

China is Australia’s largest trade partner and also the largest source of tourists, with more than 1 million Chinese visiting the country last year. Even though Australia was hit by bushfires, Chinese tourists are still coming, especially amid the Lunar New Year holiday that starts this week.

Australian Prime Minister Scott Morrison called citizens to remain calm. He tweeted:

“We are well prepared to respond to this situation and we will continue to monitor and take action where necessary.”

Investors reacted promptly while recalling the outbreak of the Severe Acute Respiratory Syndrome (SARS) from 2002/03 that started in China. The SARS killed about 800 people globally at the time. However, Australia doesn’t start scanning passengers for higher body temperatures for now.

Elsewhere, the sterling is getting traction after IHS Markit said that British households had grown more confident about their finances while Rightmove data showed that house prices rose by a record amount this month.

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