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The durability of the rebound in risk appetite is of course the key question for AUD crosses, according to economists at Westpac Institutional Bank. AUD/GBP is trading at 0.5150.

Key quotes

“Supportive factors include open-ended QE programs by major central banks, FX swaps lines to avoid further scrambles for US$ and plans by many OECD governments to loosen coronavirus restrictions. The latter raises the prospect of a considerable rebound in the global economy in H2 2020.”

“We expect that the extended period of brutal economic data and waves of earnings downgrades globally will weigh on risk appetite including equities in coming weeks. Moreover, doubts over the scale of the expected recovery may grow.”

“Both the RBA and BoE are pursuing very expansionary monetary policy and fiscal support is substantial, especially in Australia. Australia’s C/A position is much more supportive and Australia’s much lower Covid-19 case count should mean a quicker restarting of economic activity in Australia.”

“Given our baseline view on global risk appetite, we see AUD softening to GBP 0.5050/0.5100 or AUD 1.96-1.98 multi-week.”