- GBP/AUD could see 1.84 again if frothy AUD cools

- Virus’ spread stokies two-way risk on RBA QE call

- After RBA passes buck to July while eyeing AUD

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GBP/AUD reference rates at publication:Spot: 1.8288Bank transfer rates (indicative guide): 1.7648-1.7776Money transfer specialist rates (indicative): 1.8123-1.8160More information on securing specialist rates, hereSet up an exchange rate alert, hereThe Pound-to-Australian Dollar exchange rate entered the mid-week session close to what may be an important level of support but could return toward recent highs around 1.84 over the coming days owing to uncertainties in and around the Aussie Dollar.

Pound Sterling and the Australian Dollar were soggy early in the mid-week session while the Pound-to-Australian Dollar rate was edging higher from near the 1.82 level alongside a tentative rebound in the U.S. Dollar.

Australia’s Dollar was laggard relative to Sterling and many other major currencies after it emerged overnight that Victoria state, a sizeable part of the Aussie economy, would see a recent ‘lockdown’ extended for one week from Thursday due to a growing cluster of coronavirus cases.

This may have offset for the Antipodean unit what was otherwise seemingly good news in relation to the economy with GDP data having arrived stronger-than-was expected for the opening quarter of the year.

Australian GDP rose 1.8% in the opening quarter of the year, down from 3.2% in the closing months of 2020 but higher than was anticipated by the consensus, which looked for an increase of only 1.5%.

“Spending in Victoria was down 49% in the first three days of lockdown (Friday 28 May to Sunday 30 May), compared with the Friday–Sunday of the week prior. This is not unexpected, being broadly in line with other snap lockdowns.. The experience from other snap lockdowns is that spending recovers very quickly as things open up. This lockdown will be the first lengthy one without JobKeeper, however,” says Brian Martin, an economist at ANZ.

Above: Pound-Australian Dollar rate shown at daily intervals alongside AUD/USD and GBP/USD.

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“The surprise in the RBA’s June statement was that while the Board is considering future bond purchases the, perhaps redundant, wording in the May statement about the Board being “prepared to undertake further bond purchases” has been removed. This possibly poses risks to our call on QE3,” Martin adds.

Australia’s new shutdown in Victoria came barely a day after the Reserve Bank of Australia (RBA) appeared to pass a monetary policy buck into the July month when delaying an important decision over the future of its quantitative easing programme without giving any clear hint at the way in which it could lurch over the question of whether to do further bond purchases or to begin reining them in.

This is stultifying news for the Australian Dollar and a marginal positive for the Pound-to-Australian Dollar exchange rate, which would rise to around 1.8350 over the coming days and potentially further - possibly even as far as 1.84 - if the main Aussie exchange rate found itself under pressure and back near the 0.77 handle.

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Much about the latter could depend economic data working its way through the pipeline including the latest non-farm payrolls report on Friday at 13:30, although speeches from Federal Reserve (Fed) monetary policymakers could also have impact on the greenback given recent signs of a potential shift in the bank’s views of its quantitative easing programme.

“We expect more frustrating range trade. The recent jump in coal prices adds to the A$ being cheap to fair value - we should be trading closer to 0.8250 and at the very least should be above 0.7900. We remain happy to stay long from the last dip below 0.7680 and to passively buy further dips below 0.77,” says Richard Franulovich, head of FX strategy at Westpac.

Above: Pound-Australian Dollar rate shown at weekly intervals alongside AUD/USD and GBP/USD.