The AUD to GBP exchange rate was 0.23% lower on Wednesday as traders continue to push sterling higher against the Aussie dollar on hopes of a recovery. flat in Tuesday trading after giving up gains earlier in the session. The Australian economy was boosted by an upgrade from the International Monetary Fund.
AUDGBP is trading at 0.5625 and there is some support at 0.5600 which could open a door to further gains in the pound.
Pound Shrugs off Data as Traders Eye Big Picture
The British economy is not showing any real signs of strength, with disappointing retail sales and jobs numbers. The retail sector saw a weak Christmas period and the employment rate confirmed a rise to 5% this week.
These data points are being driven by the ongoing lockdowns in the country and traders are happy to look beyond this. The UK government has administered around 6 million doses of the coronavirus vaccine to vulnerable age groups and the country has targeted 15 million by mid-February. This could see the UK getting its economy, especially in less-affected regions, back open.
The AUD to GBP rate was punishing for sterling bulls in 2020 as the pair bottomed as the outset of the virus and worsened as the UK became an epicentre of virus cases. The pound is now showing signs of a recovery and this could also see some post-Brexit revaluation if the UK can sign new trade deals or show some improvement in its trade balance.
IMF Upgrades Hopes for Australian Economy
The International Monetary Fund (IMF) is now more bullish on the global economy and expects it to make a stronger recovery this year with Australia given an upgrade.
The country’s Treasurer Josh Frydenberg welcomed the IMF’s upgraded assessment for Australia. The IMF sees the Aussie economy growing 3.5 per cent in 2021, which would be a 0.5 per cent improvement on previous forecasts.
Frydenberg was quick to accept praise for the performance, telling reporters:
“The Australian economy is being expected to contract by just 2.5 per cent. That is a function of our effective management of the health crisis but also the unprecedented financial and economic support provided by the Morrison government.”
The AUD to GBP outlook is looking to rebalance for a faster UK recovery. The Australian economy will be in good shape when the virus recedes and the country will be supported by continued export strength via China, which never saw a real second wave of the coronavirus. Traders are looking to add the potential for a UK economy that reopens quicker than was previously expected. If the UK can get its economy open faster than Europe, the country could see a wave of investment capital moving in.
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