The GBP/AUD exchange rate has maintained a strong bearish momentum for the better part of this week but its performance on Friday morning indicates weak bearish movements, suggesting the likelihood of a reversal.
After crossing the 1.9841 resistance level, the price has steered clear of all the resistance levels since it has been on a bearish run. However, this bearish momentum pushed it past the 1.9690 support level and also the 1.9602 support. Any attempts to go lower have been futile and has been characterized by pullbacks or retracements, thus indicating that the bearish momentum was running out of energy.
The GBP/AUD currency pair has been on a spectacular bear run that started last Friday. So far the currency pair price has gone back to levels that it reached in the last week of March 2020. This performance indicates that the Australian dollar has been growing stronger against the Pound Sterling for the past 6 days or so. This is around the same time that the UK industries have reportedly slowed down significantly and unfavorable market reports have become the norm.
The GBP is one of the worst-hit currencies by the COVID-19 pandemic. Lockdowns and self-isolation measures have put the UK economy on its knees as the reports of coronavirus infections in the UK continue to soar. The GBP experienced sizable losses after the UK’s Office for National Statistics (ONS) announced weak GDP data. On the flip side, the Australian Dollar has been gaining and this is mainly because the Australian economy has not suffered as much.
The AUD has also benefited from the reopening of Chinese industries over the past week after reports that China had managed to curb the virus and its spread. The benefit to the AUD is because China is Australia’s largest trade partner. This means that the return of China’s production directly benefits the Australian economy. This explains investors’ renewed optimism in the Australian dollar.