GBP/AUD Extends Rally, Hits Highest Since Feb 3

GBP/AUD is extending the rally that started last Wednesday. Currently, the pair is trading at 1.9620, up 0.37% as of 5:50 AM UTC. The pair rose the highest level since February 3 and is about to update the monthly peak, which will coincide with the highest since June 2016.

AUD Hit by Rapid Spread of Coronavirus

Both the sterling and the Aussie reacted negatively on spread of the coronavirus, but the Australian currency has been more responsive as the country’s economy was previously hit by one of the worst bushfire seasons on record.

The number of coronavirus infections increased beyond China, in countries like South Korea, Italy, and Iran. In South Korea, the number of total cases exceeded the 600 mark, with the Seoul government being on high alert.

Earlier today, China reported that its total number of coronavirus cases had increased to over 77,000. The world’s second-largest economy might be forced to extend its stimulus measures to support a bleeding economy. China is Australia’s largest trade partner and greatest source of tourists.

Besides the virus spread, the Aussie continues the bearish stance after Friday data showed that Australia’s composite purchasing managers’ index (PMI) fell once again in February. The services PMI tumbled to 48.4 from 50.6 in January, while manufacturing PMI slightly rose to 49.8 from 49.6 last month.

Gareth Aird, a senior economist at the Commonwealth Bank of Australia (CBA), commented on the effect of the coronavirus and bushfires:

“Our main concern is that these event have hit the global and local economies at a time when domestic demand was already soft. The level of both the services and manufacturing PMIs highlights the need for more policy stimulus.”

UK Faces Trade Negotiations with EU

Elsewhere, the pound is under pressure ahead of the post-Brexit trade talks between the UK and European Union, but bears are milder with respect to it.

On Saturday, French President Emmanuel Macron said he wasn’t confident that the two sides would reach a trade deal by the end of this year, which is the timeline endorsed by UK Prime Minister Boris Johnson. Macron stated:

“It’s going to be tense because they are very tough. Boris Johnson has a card in his hand and it is fishing and with that he will try to gain access to the market. It is not certain that we will have a global deal by the end of the year.”

Currencylive.com is a news site only and not a currency trading platform.

Currencylive.com is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.