- Risk appetite improves as lockdown measures ease
- Australian Dollar (AUD) gains as Novavax moves vaccine to clinical trials
- British Pound (GBP) gains limited by looming Brexit deadline
- At 09:00 UTC, GBP/AUD is trading -0.1% at 1.8594 >> Real time exchange rate
The Australian Dollar is moving tentatively higher versus the Pound on Tuesday a trend which has been in place since early April.
The pair has fallen from highs of 2.08 during the height of the coronavirus crisis to current levels of around 1.8600 last seen back in November.
At 09:00 UTC, GBP/AUD is trading -0.1% at 1.8594. This i approximately mid-way between the daily traded range of 1.8569 – 1.8650 amid an upbeat mood in the market.
Risk on trading is helping to boost demand for the perceived riskier Australian dollar. Economies across the globe continue to ease lock down measures, lifting optimism of a global economic recovery. In some Australian states schools returned yesterday and beauty salons, clubs, bars and restaurants will open next week.
Vaccine hopes are also aiding risk appetite on Tuesday. US firm Novavax announced that it started phase 1 clinical trials of a vaccine for coronavirus on humans. The results are expected in July. The biotechnology firm’s announcement comes hot on heels after Moderna, another US firm revealed encouraging results from its human trials.
Analysts consider a vaccine to be the quickest way for economies to bounce back to normality. Therefore, the slightest hint of a vaccine coming boosts risk sentiment in the financial markets.
The Pound was trading broadly higher versus its major peers although lower versus the Aussie Dollar, following clarity from Prime Minister Boris Johnson over the easing of lockdown measures. Boris Johnson announced that street markets and outside car dealerships could reopen from next week. All shops will be able to reopen as from 15th June, if they adhere to government rules to prevent the spread of the virus, boosting hopes of a UK economic recovery.
With little in the way of UK economic data today or across the week to grab investors’ attention, coronavirus and Brexit headlines will move the Pound.
A hard Brexit is still on the table if no trade deal is agreed. The UK has until the end of June to request an extension to the transition period which is due to end on 31st December this year. Any gains in the Pound could be limited with this deadline looming.
