Australian Dollar (AUD) Plummets to Fresh 11-Year Low
The Pound Sterling Australian Dollar (GBP/AUD) exchange rate rallied by around 0.8%, leaving the pairing trading at around AU$1.9745.
The risk-sensitive Australian Dollar slumped today as fears the world was on the brink of a pandemic mounted.
Against the US Dollar (USD), the ‘Aussie’ slumped to a fresh 11-year low, and suffered significant losses against the Japanese Yen (JPY).
Commenting on the effect the spread of the virus is causing, Sean Callow, Westpac FX analyst noted:
‘We haven’t found any reason to stabilise. Every half hour or so we get a new headline about a factory closure, or a case in a country that hasn’t had one before […] this sort of move, it feeds on itself.’
According to ANZ analysts, if the outbreak continues and gets worse, the Australian Dollar could slump as low as $0.58.
ANZ’s FX head, Daniel Been said:
‘The current degree of uncertainty makes it prudent to think about where the AUD and NZD may fall.’
Sterling (GBP) Rallies as UK Consumer Confidence Rises
Today the Pound rose despite outgoing Bank of England (BoE) Governor, Mark Carney warning the UK should prepare for an economic hit as Covid-19 continues to spread.
Speaking to Sky News, Carney said:
‘We’re not picking that up yet at all in the European and UK economic indicators, but if the world is slower than the UK, a very open economy, will have an impact.’
Meanwhile, GBP received a slight upswing in support after UK consumer confidence rose to its highest level since August 2018.
GfK’s measure of confidence was buoyed by optimism about the country’s economy, which increased the willingness of households to purchase big-ticket items.
Despite the UK being locked in a transition period with the EU until the end of the year, recent data has suggested the economy is beginning to rebound.
However, GfK warned that the coronavirus outbreak could start to impact consumer behavior and spending as the number of Covid-19 cases in the UK jumped to 19.
Pound Australian Dollar Outlook: Will AUD Extend its Slide?
Looking ahead to Monday, the Australian Dollar (AUD) could suffer further losses against the Pound following the release of job advertisements data.
If ANZ job advertisements slump further than expected in February, the ‘Aussie’ will remain under pressure.
Meanwhile, if pandemic fears continue to grip markets, the risk-sensitive Australian Dollar will suffer further losses.
If the number of global Covid-19 cases continues to grow, and a pandemic
is declared, the Pound Australian Dollar (GBP/AUD) exchange rate will jump.
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