The Australian dollar is surging across the session on Friday as risk sentiment improved considerably.
At 15:00 UTC, GBP/AUD was trading -1.1% (-232 points) lower at 1.9925. The is a matter of too little too late for the Australian dollar which has declined 1.5% versus the Pound.
Pound Drops Amid Doubts Over Coronavirus Plan
The Pound was trading lower across the board on Friday as investors digested the minutes from the Bank of England policy meeting from earlier in the week. This is the meeting where the BoE voted to slash interest rates from 0.75% to 0.25%. These minutes highlighted the central bank’s uncertainty over the scale of the economic hit that it was expecting. However, the minutes also showed that the BoE expected the data in the coming weeks to start showing a deterioration. The BoE also confirmed that they could cut rates again, potentially as soon as next week if needed.
Also weighing on the Pound has been Boris Johnson’s response to the coronavirus outbreak. Few schools have been closed and there has not been a blanket ban on large scale public meetings. The fear is that if the outbreak isn’t controlled the impact will be much greater.
Finally, Brexit talks are delayed for next week. The timeline is already time for Brexit talks and delays will only increase the chances of a no trade deal Brexit.
Australian Dollar Soars Post RBA Injection
The Australian Dollar is roaring higher on Friday after the Reserve Bank of Australia took steps to support the Australian economy in the face of the coronavirus outbreak. The RBS pumped AUD$8.8 billion into short term bank funding. This is more than twice the standard daily amount in order to meet a surge in short term liquidity demands from banks.
The move follows a similar move buy the New York Federal Reserve on Thursday as well as moves by the European Central Bank and the Bank of England earlier in the week. These moves to prop up the financial systems have also served to boost risk sentiment in the markets, which is also lifting riskier currencies such as the Australian Dollar.
