The Sterling-Aussie exchange rate jumped around in volatile sideways trading as both currencies jostled to benefit from the newly announced $2 trillion US coronavirus spending package.
News that Price Charles, first son of the Queen of England and first in line to throne had contracted the coronavirus came as a shock to London-based currency traders and may have contributed to some volatile afternoon trading.
GBP/AUD was up by 70 pips (+0.38%) to 1.9805 with a daily range of 1.9546 to 1.9863 as of 5.30pm GMT.
The currency pair has not recovered from the steep losses on Monday and is trading with a new lower midpoint of 1.98, having been trading closer to 2.00 last week. The exchange rate is -1.32% on the week to date.
British pound higher with UK on third day of lockdown
Prince Charles contracting the coronavirus caused a shockwave through currency markets and highlights the political on top of the economic and health risks of the coronavirus.
The UK government has a new message from the UK government is: ‘Stay home, protect the NHS (National Health Service), Save Lives’.
The British government, like others has enacted tough lockdown measure to stop the unnecessary movement of people and the spread of the coronavirus. The biggest issue is that people need to follow ‘social distancing’ measures to give authorities and health systems time to manage an expected big rise in need for critical care.
Inflation data from the United Kingdom for February proved of little interest to currency speculators, who dismissed it as inconsequential because it does not factor in the coronavirus.
The international response to the coronavirus pandemic is possibly as important to the Australian economy as the national one. So the passing of the US $2 trillion rescue package was a positive for the Aussie, as is the improving state of affairs in China.
China has said it will open up rail links into Hubei province in early April, with people from Wuhan soon permitted to leave after new infections dropped to zero.