GBP/AUD is still following an uptrend that started on March 4, but the pair has moved sideways since last Thursday. Currently, one British pound buys 2.0087 Australian dollars, up 0.20% as of 7:00 AM UTC.
RBA Ready to Boost Stimulus
The Aussie continues to decline as the economic damage caused by the coronavirus outbreak is only getting worse. The Reserve Bank of Australia (RBA) said that it was ready to further ease policy amid the “unprecedented” spread of the new virus. The central bank released its meeting minutes earlier today, showing readiness to support the economy. Investors now expect the RBA will launch aggressive stimulus later this week.
Recently, the central bank cut the interest rate to 0.5% from 0.75%, updating the record low. The move is meant to “provide additional support” to employment and the economy in general. Policymakers will announce further steps on Thursday. Most analysts predict that the RBA will cut rates again to a new low at 0.25%.
Yesterday, the bank said that it would increase liquidity and was ready to purchase government bonds. In its minutes, the RBA said:
“It was becoming increasingly clear that COVID-19 would cause major disruption to economic activity around the world. Growth in output in China and other economies was expected to be significantly lower in the first half of the year.”
UK Will See Weakest GDP Growth Since 2009
Even though the sterling is now a bit stronger than its Australian counterpart, the British currency is under pressure as the coronavirus is rapidly spreading in Europe. On Tuesday, the British Chambers of Commerce (BCC) said that the UK’s economy is set for weakest growth since the financial crisis this year.
The GDP is on track for growth of 0.8% in 2020, down from previous estimations of 1.0% growth.
BCC’s Suren Thiru stated:
“It is increasingly likely that the boost from higher government spending and more political certainty will be surpassed over the near-term by the negative impact of coronavirus on the UK economy.”
Later today, Britain will reveal additional stimulus for businesses hit by the coronavirus outbreak, as the government ordered citizens to avoid clubs, restaurants, pubs, cinemas and theaters.
