The GBP/AUD exchange rate started off Wednesday’s trading session on a rather downturn mood, with the price shifting from weak bullish towards neutral. The likely culprit behind the lack of momentum was the cautious investor outlook on the two currencies, thus low trading volumes. This is mainly due to concerns over the new COVID-19 cases, which may force governments to withdraw their plans to reopen their economies or ease restrictions put in place to prevent the virus from spreading. The GBP has also been weighed down by the rebooted Brexit concerns.
The GBP/AUD was off to a weak bullish performance bordering towards neutral. Technical analysis expects the price to trade long above the 1.8998 with resistance expected at 1.9018, 1.9087, and 1.9189 if the price goes bullish. However, a bearish performance will likely see the price trading below 1.8958 with support expected at 1.8938, 1.8851, and 1.8767 price levels.
The current COVID-19 situation has placed a lot of pressure on both the British and Austrian economies, and thus the impact of that pressure is evident in the GBP/AUD’s current performance. The next few months will be critical for the performance of both currencies, especially based on economic performance.
The governments of both countries have been busy implementing economic support measures. Analysts are concerned about the UK’s increasing debt level, which is currently more than $2.5 trillion. The country’s borrowing in the public sector might hit 14% of the UK’s GDP before the end of 2020, which is the highest level in more than 70 years.
The Australian dollar is also expected to face some pressure from the higher unemployment rate and displeasing market data. However, the GBP might end up facing more pressure over the long-term as Brexit concerns pile on top of coronavirus concerns. The GBP/AUD ill likely continue to slide and perhaps even reach new 2020 lows.