GBP/AUD Exchange Rate Climbs Back Above AU$2.00 In Anticipation of Stimulus

GBP/AUD Rallies Ahead of Stimulus Annoucnement

Updated 20/3/20 14:00 GMT: The Pound to Australian Dollar (GBP/AUD) exchange rate is back on the rise this afternoon, in anticipation that Chancellor Rishi Sunak will announce additional stimulus measures today.

This has seen GBP/AUD climb back above AU$2.00 on hopes the new measures will go further towards protecting jobs and wages from the fallout from the coronavirus.

Chancellor Rishi Sunak is to announce an employment and wage subsidy package to try to protect millions of jobs

Talks went on into the night with business groups and union leaders, as many firms warn of collapse https://t.co/Adg6x5YrC2
— BBC Politics (@BBCPolitics) March 20, 2020

Meanwhile. the Australian Dollar was forced to relinquish some of its intial gains as it was undermined by a stronger US Dollar (USD)

GBP/AUD Exchange Rate Weakens as RBA to Implement QE

The Pound to Australian Dollar (GBP/AUD) exchange rate is on the back foot this morning, ticking lower after the Reserve Bank of Australia (RBA) announced a new bond buying programme.

At the time of writing the GBP/AUD exchange rate is trading at around €1.9890, down roughly 0.5% from this morning’s opening rate.

Australian Dollar (AUD) Advances on RBA Stimulus Announcement

Following a difficult week for the risk-sensitive currency, the Australian Dollar (AUD) was able to find some solid footing in overnight trade as the RBA detailed further stimulus measures aimed at protecting the Australian economy from the coronavirus crisis.

At a meeting yesterday, the Reserve Bank Board agreed to a comprehensive package to support the Australian economy through the current challenging period – https://t.co/YYzRnpZGyO
— RBA (@RBAInfo) March 19, 2020

Following the RBA’s move to slash interest rates to a new record low at the start of the week, the bank sought to further calm market nerves by providing details of its first round of quantitative easing.

The RBA announced it will buy up to AU$5bn worth of government bonds as it seeks to limit the economic impact of the coronavirus

Further buoying the appeal of the ‘Aussie’ this morning has been a pullback in the US Dollar (USD) through the Asian trading session.

After soaring through the first half of the week and putting considerable pressure on the Australian Dollar and other risk-sensitive currencies. Demand for the US Dollar cooled on Thursday as efforts by central banks to improve liquidity in USD eased fears of potential shortages as investors and companies pile into the ‘Greenback’ amidst heightened uncertainty regarding the coronavirus.

New Stimulus Measures to Boost the Pound (GBP)?

At the same time, the Pound (GBP) is finding support this morning ahead of the announcement of additional stimulus measures from UK Chancellor Rishi Sunak later today.

Following on from Sunak’s pledge of a £330bn loan package and £20bn in other aid earlier in the week, the Chancellor is expected to detail a new package aimed at protecting millions of jobs.

In his coronavirus briefing on Thursday, Prime Minister Boris Johnson urged businesses to ‘stick by their employees’, signaling the government would be announcing measures to help them retain staff.

Reports suggest the UK may follow the lead of some European countries in promising to subsidise up to 75% of wages for private businesses for the next three months in order to help them survive without having to lay off employees.

FCF