The British pound is lower against the Australian dollar on Wednesday with hopes for policy stimulus boosting the Aussie while a sharp rise in the severity of the coronavirus outbreak in the UK is forcing an exodus from Sterling.
GBP/AUD was down by 52 pips (-0.15%) to 2.0046 with a daily range of 2.0010 to 2.0305 as of 4.30pm GMT. The currency pair is challenging the key 2.00 level to the downside. The exchange rate is still positive for the week at +1.00%.
British pound
Another rout in global markets has seen the pound drop substantially against the US dollar, meaning weakness against other currencies too. The Australian dollar is also weak vs. the US dollar so is simply reclaiming some lost ground versus the pound from the past few days. The number of UK coronavirus cases jumped by 700 in the last twenty four hours. The speed of the government response has been heavily criticised and there is some evidence now that it might have caused a bigger spread.
Prime Minister Boris Johnson’s warning to stop going to pubs and restaurants has been ignored by large numbers so reports now suggest tough measures will have to come into place in the capital.
It is seeing the highest number of cases being reported so there will likely be a lockdown in London with much more limited public transport.
Australian dollar
The policy announcement from the Reserve Bank of Australia on Thursday is expected to see a new quantitative easing program for Australia. It would now be a big disappointment if it didn’t come because of the recent comments made by Governor Phillip Lowe and others. Lowe will hold a press conference at 4pm local time in Australia.
Top Australian banks have been lowering their forecast for the Australian economy, adding more downside pressure to the Aussie. West Pac revised down its forecast that it formed just a week-and-a-half ago. Westpac now forecasts, like fellow bank ANZ that there will be technical recession in H1 but there will be rebound in H2 and unemployment to rise over 7%.
