The AUD to GBP exchange rate started the week flat at the 0.5665 level which ended the week. Traders are awaiting economic data on the week and there were no headlines over the weekend to move the pair.
AUDGBP started the year with a strong rally as the Aussie dollar took advantage of the pound’s virus woes, but Australia has since seen cases emerge, while the UK ramps up vaccines with a view to exiting the strict lockdown measures.
Aussie Unphased by Chinese Data
The Australian Dollar saw a mixed set of economic data from its key trading partner today. Chinese GDP came in higher than expected at 6.5% versus 6.2%. This was balanced by a drop in retail sales figures for December, which suggest that the country’s economic recovery may be slowing.
Despite this, industrial production showed that the manufacturing sector is still seeing strength and this will give traders hope that the country’s demand for Australian mining products will rise.
The price of iron ore has been a driver for recent Aussie strength but there was a drop-off in Australian ore exports to China with demand dropping to its lowest levels since early December.
There was also talk of another virus outbreak in the mainland and with Chinese New Year celebrations coming up, the risk of domestic travel pushing another surge in cases has traders concerned.
In Australia, many were criticizing the decision to host the Open tennis tournament with thousands still stranded overseas due to the coronavirus. Adding to the frustration, the head of the country’s health department warned on Monday that the country may not fully reopen its international borders in 2021.
Brendan Murphy told ABC news: “Even if we have a lot of the population vaccinated, we don’t know whether that will prevent transmission of the virus”.
The country has seen limited spreads of the coronavirus but the country’s borders have been shut since March 2020.
UK Economy Awaits Inflation Data
The AUD to GBP rate will see movement on Wednesday as the pound awaits the latest core inflation release. Analysts are expecting a reading of 1.3%, and this number could determine whether the currency pair moves ahead of the recent highs.
The pound has been helped by the signing of the post-Brexit trading agreement and the Bank of England governor has stated that there is no rush to implement measures for stimulus and negative interest rates.
Sterling was unable to capitalize on the Brexit deal with many still sceptical on the pound outlook. Despite this, the UK is on track to vaccinate 15 million of its vulnerable population by mid-February and this could spur a reopening of the economy in March.
The pound could rally against other world currencies if it can get back open and outperform the gloomy expectations for post-Brexit trading.
Support for further pound strength this week would come in at the 0.5600 level. To discuss these factors in further detail, feel free to get in touch using the form below.