- Pound (GBP) is tanking across the board on rising covid fears
- London could be on the brink of a second lockdown
- Australian Dollar has remained well supported owing to robust export demand & fiscal support
- RBA Deputy Governor Guy Debelle to speak tomorrow
The Pound Australian Dollar (GBP/AUD) exchange rate is plunging lower on Monday, paring gains from the previous week. The pair settled on Friday up 0.9% across the week at 1.7714. At 06:15 UTC, GBP/AUD trades -0.3% at 1.7646, towards the low of the day whilst heading towards the 2020 low of 1.7494.
The Pound is plunging amid fears that London is on the verge of a second lockdown. Rising covid-19 across the north of England and now London is raising the possibility of more restrictive lockdown measures.
Britain’s top medical adviser, Chris Whitty is due to warn that the UK is at a critical point in the covid battle and faces a challenging winter in a briefing to the public today. The infection rate in the UK is heading in the wrong direction and is only a few weeks behind France and Spain where infections have surged and unfortunately deaths are on the rise too.
Tighter lockdown restrictions will hamper the economic recovery. In a separate report, British manufacturers said that hopes of V-shape recovery were farfetched, with no evidence no evidence of such a recovery coming through. Many manufacturers are planning to slash business investment. BDO reported that investment intentions fell to -32% from -26%, almost as low as intentions seen in the financial crisis.
There is no UK data due today meaning that sentiment will continue to drive sterling.
The commodity currency the Australian Dollar has remained well supported thanks in part to ongoing demand for key Autralian exports such as iron ore, coal and gold and owing to substantial support from the Autralian government. The Australian budget is due to be released on 6th October and will provide guidance as to whether the government will look to increase its fiscal support.
There is no high impacting data due to be released today. Investors will look ahead to a speech on Tuesday from RBA Deputy Governor Guy Debelle about monetary policy and the economy.