GBP/AUD: Pound Paring Earlier Gains, Coronavirus & Oil Headlines Dominate

The Pound surged to a high of 2.0751 versus the Australian Dollar earlier in the session on Monday. However, the Pound is paring some of those losses as financial markets attempt to stabilise after a manic Monday.

Pound Advances On BoE Stance

The pound was trading broadly higher versus its peers on Monday as risk sentiment took a turn for the worse. Concerns over escalating coronavirus cases and an oil price war between Russia and Saudi Arabia sent riskier assets tanking.

The pound has managed to hold its ground so far amid the mayhem, thanks to a calm approach from the Bank of England. Whilst central banks across the globe including the US Federal Reserve and Bank of Canada have cut rates in the face of raising threats to the global economy, the Bank of England has adopted a wait and see approach.

Both the outgoing BoE governor Mark Carney and the incoming governor Andrew Bailey have both said that they would wait and see what the Chancellor has to offer in the Budget next week and what upcoming data shows.

The Pound has remained steady even as the FTSE tanked over 6.5% in the worst day of trading since 2016.

Investors will now look towards the Budget on Wednesday to see whether the Government is able to support the economy to the necessary extent to boost confidence and avoid a recession.

Australian Dollar Sinks On Risk Off Trading

The Australian dollar is a perceived riskier currency, which is why it traded on the back foot on Monday. Hand in hand with other Pacific currencies, the Aussie dollar dropped as market volatility spiked amid very unstable market conditions. Whilst riskier currencies came under pressure, safe havens such as the yen gained ground.

Disastrous export data from China also hammered home the message that coronavirus is negatively impacting the global economy.

Investors are fearing a global recession as coronavirus escalates and an oil price war breaks out. Usually lower oil prices are favourable for the consumer. However with coronavirus hitting oil demand expectations as well, investors are nervous.

Australian dollar investors will continue monitoring coronavirus headlines.

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