GBP/AUD Exchange Rate Dips as Analysts Assess UK Coronavirus Stimulus Measures
The Pound to Australian Dollar (GBP/AUD) exchange rate is ticking lower this morning as the UK government’s new coronavirus stimulus package faces scrutiny.
At the time of writing the GBP/AUD exchange rate is trading at around €2.0146, down roughly 0.3% from this morning’s opening rate.
Pound (GBP) Stumbles on Warnings £330bn Stimulus Packages Does Not Go Far Enough
The Pound (GBP) is struggling to hold its ground against the Australian Dollar (AUD) this morning as economists assess the UK’s government’s new stimulus packages aimed at limiting the economic impact of the coronavirus.
In a press conference on Tuesday Chancellor Rishi Sunak announced a £330bn package of financial measures aimed at supporting businesses impacted by the coronavirus, dwarfing the £30bn pledged in last week’s budget as the situation continues to deteriorate.
However, analysts are suggesting that this package, which is mainly aimed at the retail, leisure and hospitality sectors after Boris Johnson urged people to stay inside, still doesn’t go far enough.
Paul Johnson, director of the Institute for Fiscal Studies (IFS) warns:
‘This is a substantial level of support. However, it is probably not well targeted at saving jobs in those industries. Supporting employment might require a targeted package which included targeted cuts to employer national insurance contributions, a delay in increases to the national living wage, and increased support for individuals through universal credit.
‘Firms outside the leisure and hospitality sector have not been targeted with this additional direct support. Many of them may face similar problems of reduced demand, or problems resulting from fewer employees able to work.’
The Chancellor has already pledged to provide additional stimulus if needed and GBP investors will be watching closely to see if some of these concerns are covered in the days to come.
Risk-Off Trade Tempers the Australian Dollar (AUD)
At the same time, the Australian Dollar (AUD) has found its gains against the Pound (GBP) capped this morning as the appeal of the risk-sensitive currency continues to be dented by the flight to safe-haven assets.
Further limiting the appeal of the ‘Aussie’ was the suggestion by S&P Global Ratings that growth in the Asia-Pacific region is likely to half in 2020 due to the economic fallout from the coronavirus.
Expect AUD exchange rates to face considerable pressure in the weeks to come as the coronavirus crisis rolls on.
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