GBP/AUD continues to move in line with an uptrend that formed on March 4. The pair is currently trading at 2.0042, which is slightly down from yesterday’s high at 2.0208.
The sterling is in a bad situation as the UK stock market saw its worst trading day since 1987. However, the Australian dollar is in an even worse condition as investors are dumping the currencies with exposure to global trade and commodities. Australian stocks declined by 7% on Friday, experiencing the biggest weekly decline in history. The bears are now ruling everywhere amid the panic caused by the coronavirus outbreak and the oil price war between Saudi Arabia and Russia.
Aussie Reacts to Coronavirus Panic
The Australian government recommended the chief medical officer to ban any mass gathering of more than 500 people. The country has confirmed 156 infections and three deaths from the virus. However, authorities anticipate a rapid increase in the coming weeks.
Australia’s home affairs minister Peter Dutton was tested positive for COVID-19 earlier today. He said:
“This morning I woke up with a temperature and sore throat. I immediately contacted the Queensland Department of Health and was subsequently tested for COVID-19. I was advised by Queensland Health this afternoon that the test had returned positive. I feel fine and will provide an update in due course.”
The Reserve Bank of Australia (RBA) injected way more cash into the financial system than the estimated requirement. The central bank pumped the equivalent of $5.52 billion via repurchase agreements.
Yesterday, the government announced a stimulus measure to offset the impact of the coronavirus outbreak. However, none of that can stop the panic.
Pound Suffers Similar Fate
The Aussie tumbled to 11-year lows against the US dollar, but doesn’t move away from the sterling because the latter is also hit by the market shock.
The UK government will impose more drastic measures to curb the impact of the virus. Also, Britain and the European bloc cancelled face-to-face trade talks planned for next week in London. This might hurt the already tight timeline, as the two sides have to reach a deal by the end of December. The parties said in a joint statement:
“Given the latest COVID-19 developments, UK and EU negotiators have today jointly decided not to hold next week’s round of negotiations in London, in the form originally scheduled. Both sides are currently exploring alternative ways to continue discussions, including if possible the use of video conferences.”
