GBP/USD: Pound Low vs. Dollar As Political Scene Intensify

The British pound is higher against the Australian dollar on Tuesday.

Unwinding short positions may explain a lot of the gains in the pound. A short position is a bet on falling prices. A new government-enforced lockdown across the United Kingdom was seen in a positive light by investors as the best way to combat the spread of the coronavirus.

The Australian dollar was a beneficiary of improved global sentiment but was unable to trump daily gains in Sterling.

GBP/AUD was up by 35 pips (+0.19%) to 1.9853 with a daily range of 1.9519 to 1.9974 as of 5pm GMT.

The currency pair came back from opening losses that saw it drop to 1.96 to surge over 300 pips to 1.99 but it remains in negative territory for the week to date, down -1.12%.

British pound continues short-covering rally

There was some atrocious economic data from the United Kingdom, but since it is expected to be just as bad if not worse in other countries, it was not a big contributing factor to the movement in the pound.

The Flash Composite PMI for March came in at fresh record low of 37.1, a lot worse than 53.0 in February. The composite reading is for purchasing managers in both services and manufacturing sectors. A reading above 50 shows expansion while a reading below 50 means contraction.

It is a fair assumption that if purchasing managers were asked again today, the readings would be significantly worse since the data comes before government lockdown measures went into force at the end of last week.

Australian dollar down despite cash injection

The injection of billions of AUD into the financial system seems to benefitting the Australian dollar for its possible positive economic effects. The RBA has said it will not lower interest rates again so the short term policy implications are that no new measures are coming from the central bank that could weaken the currency.

PMI data from Australia suggests Australia, like the UK is headed for recession. The flash composite PMI for Australia fell to 40.7 in March from 49 prior. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. ("We", "Us"), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.