In times of currency volatility caused by the COVID-19 crisis investors must diversify their portfolios. The GBP/AUD pair is one of the best options. In this article, we will take a look at the GBP to AUD exchange rate now and where it is heading.
17 June, 2020 | AtoZ Markets – In times of currency volatility caused by the COVID-19 crisis investors must diversify their portfolios. The GBP/AUD pair is one of the best options you can consider at the moment. It’s one of the most commonly traded currency pairs.
Also, the GBP is the fourth and the AUD is the fifth most-traded currency in the world. This crisis has affected all countries and currencies and will continue to do so. However, both the GBP and AUD are faring admirably well in these circumstances. This gives a savvy investor an opportunity to reap many long-term benefits from making a wise trade now.
Factors That Affect the GBP to AUD Currency Pair
The most important factors to consider when trading any currency is the economy of the country in question. In the case of the GBP/AUD pair, you’ll need to monitor the health of the UK and Australia’s economies. This means you need to watch the GDP growth as well as look at the latest decisions of both countries’ central banks.
At the moment, you will also need to monitor the COVID-19 situation in every country. This pandemic hit the world extremely hard and caused a global economic recession that experts compare to the Great Depression. The progress of the pandemic and business lockdowns caused by it is a major economic factor today. You need to monitor the situation to understand what are the chances of the economy restarting and therefore recovering.
One of the most important factors to take into account when trading the GBP/AUD pair is the export data of both countries. For Australia, in particular, this also means monitoring the Chinese economy. The reason for this is that large portions of Australian exports go to China.
That in itself is a worrying factor today. But it’s also one of the reasons why the AUD isn’t in as bad position as it could have been. China is recovering fast after the COVID-19 pandemic and the risk of another wave is very low in the country. Because of this Chinese stock rose significantly and the economy is strengthening fast, compared to many other countries.
The AUD has currently dropped in value. But it always does that during an economic recession. The GBP has also weakened. However, it’s still a reserve currency, close to the USD. The American Dollar is strengthening now, but investors are wary of it because of the bad economic situation in the US. Therefore, the GBP to AUD exchange rate is of much interest to FX traders of today. The GBP is in a better position because forecasts for the UK economy are better than for the US. Australian exports also should pick up soon, thus strengthening the AUD.
GBP to AUD Forecasts for Near Future
The GBP has recently strengthened against the AUD. In fact, while the GBP/USD and GBP/EUR pairs dropped because of both the Brexit and coronavirus, the GBP/AUD pair soared. And it will continue getting stronger as the situation improves in Australia. The number of coronavirus cases is declining there and China’s economy is getting better. Therefore, it’s dragging Australia to recovery through exports.
But of course, volatility persists. The Pound Sterling is the biggest risk factor in this pair now. Everyone is bearish on the Pound today because there isn’t any stability for it in the foreseeable future. Brexit compared with the devastating effect of the pandemic guarantees that the GBP will remain volatile for some time.
The Australian Dollar, on the other hand, is strengthening in spite of the country’s economic problems. It slipped somewhat recently, but it’s still stronger than it has been since January. The Commonwealth Bank has a very optimistic outlook for the AUD. It’s said to keep rising both against the GBP and USD and become even stronger by the end of the year.
That’s a remarkable recovery post the crux of the COVID-19 crisis in March.
Unfortunately, despite all positive predictions, there is a matter of volatility to consider. The global economy is in recession and will, most likely, remain in that state for a while. Because of this crisis, making any kind of predictions is very difficult. There is no doubt that risks to FX traders are higher now than they’ve been at any time in the last decade.
Is Now a Good Time to Invest in the GBP/AUD Pair?
The GBP/AUD pair is rising in spite of everything and the AUD seems to be getting stronger by the day. The dame thing can’t be said about the GBP. But even with its current volatility, there is some assurance for investors in the Pound because it remains a reserve currency.
All things considered, the GBP/AUD pair is a good choice at the moment. It’s getting stronger while the majority of other top-traded currency pairs are dropping. It’s definitely a great option for diversifying one’s portfolio during these uncertain times.
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