Pound Sterling Australian Dollar (GBP/AUD) Exchange Rate Rallies as Wuhan Virus Reaches UK
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate jumped by around 0.5%, leaving the pairing trading at around AU$ 1.9598.
The risk-sensitive Australian Dollar slumped on Friday after fears surrounding the spread of the Wuhan virus remained at the forefront of investors’ minds.
Late on Thursday, the World Health Organization (WHO) said the outbreak was now a global emergency.
This comes as the death toll reached 213 and the number of reported cases came in close to 10,000 across the country.
Added to this, Friday saw the first reported cases of the Wuhan coronavirus reaching the UK.
The ‘Aussie’ slumped to fresh multi-month lows, falling more than 4% over the course of January. This left the currency on course for its worst week since May 2016.
Commenting on the risk-off mood, National Australia Bank’s Head of FX Strategy, Ray Atrill said:
‘Aussie and kiwi are what I’ve called the whipping boys, if you like, for expressing concern about the spreading of the virus and its potential global economic ramifications.’
BoE Decision Buoys the Pound (GBP)
Sterling was able to continue its rally against the Australian Dollar after the Bank of England (BoE) left interest rates on hold.
With markets braced for the decision, which could have gone either way, the bank leaving rates unchanged sent GBP higher.
Following Governor Mark Carney’s final rate decision, he said that recent data implied UK growth could improve.
However, the bank also left the door open for future rate cuts.
Meanwhile, before the decision was announced, Sterling jumped, making significant gains.
This prompted the BoE to ask the Financial Conduct Authority (FCA) to investigate due to speculation someone knew the decision before the information was made public.
Pound Australian Dollar Outlook: Weak Aussie Manufacturing to Weigh on AUD
Looking ahead to Monday, the Australian Dollar (AUD) could continue to slump against the Pound (GBP) following the release of Aussie manufacturing data.
If CommBank’s manufacturing PMI slides further below the 50-mark than forecast, the ‘Aussie’ is likely to fall further.
Meanwhile, the Pound could continue to rise as the UK is expected to leave the European Union this evening at 23:00GMT.
With the upcoming Brexit decision many analysts have argued the recent rally could be short-lived and commenting on this, Danske Bank strategist, Morten Lund said:
However, in the short-term, if the UK’s departure sparks an upswing in Brexit optimism, the Pound Australian Dollar (GBP/AUD) exchange rate will rise next week.
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TAGS: Pound Australian Dollar Forecasts