The AUD to GBP exchange rate was flat in early trading but the pair is trading at the lowest prices in two weeks. The pound struggled into year-end with the move to new lockdowns, but this has been outweighed by the country’s quick moves to vaccinate the vulnerable age groups.
AUDGBP is trading at 0.5640 and the pair may see little movement ahead of tomorrow’s employment figures from the British economy.
Pound Awaits Employment Release
The British Pound will await the release of employment numbers tomorrow and the market is expecting a loss of -100k jobs compared to -144k in the previous month. The UK unemployment rate is currently estimated at 4.9%, which is 1.2 percentage points higher than the previous year. The UK is currently in a full lockdown and even when this is released, there will be damage to sectors such as retail and hospitality.
The AUD to GBP rate will be decided in the year ahead by the opening of economies and the resulting performance. The Aussie economy is running almost as normal but there is still a requirement for stimulus from the Reserve Bank. The country’s situation wasn’t helped by a slowdown in demand for commodities and tariffs from China.
Early Wednesday will see the release of the latest inflation numbers from down under. Analysts are expecting a reading of 0.7% and this would match last month’s reading. The RBA has reduced interest rates to a record low of 0.1% and they would not want to see inflation rise as a result. This may happen once the global economy opens further, but the economy may be in better shape to take rates slightly higher again.
Australian Suspends Quarantine-Free Travel to NZ
Australia has suspended quarantine-free travel for people travelling from New Zealand for the next 72 hours after reports of a case of the South African virus mutation in the country. The case
Australian Prime Minister Scott Morrison announced the final approvals for the Pfizer vaccine in the country. The vaccine will now be rolled out across Australia, but the situation is not as bad as the UK with around 900 fatalities in the country. The pound has been performing well on the release of the vaccine but it will be easier to control in Australia and that should support the Aussie dollar in the event of any setbacks in the UK.
The pound is looking to test the 0.5600 lows from mid-December, while the Aussie sees the 0.5730 highs from early-January as the obstacle to further gains. With the vaccine rollouts happening in both countries, the economic data will start to have more of a say in the exchange rate. The employment and inflation releases this week should add some clarity. Get in touch using the form below to discuss these factors and their potential impact in further detail.