The AUD to GBP exchange rate was higher on Thursday by 0.15% as traders pause from the recent gains in the pound sterling. The Aussie dollar had been on a path higher but stalled at the 2020 highs of 0.5730. The next move will determine whether we see a correction in the pair, or another breakout.
AUDGBP was trading near 0.5680 with an update on UK Gross Domestic Product (GDP) coming on Friday.
Aussie Economy to be Boosted by Tax Cuts
Australia’s economy is expected to rebound from the pandemic in 2021 as generous tax cuts of over $2,000 for average-income employees are brought forward. The backdating of tax relief to July 2020, from 2022, will be a boost for consumer spending. Economists have also said that such lump sums are often used to pay down mortgages faster and this reduces the risk of debt servicing problems.
Retail sales had boomed by 7.1 percent in November after the three-month lockdown in Melbourne. The recent strict measures applied over 1 coronavirus case in New South Wales are a step backward on this path, but the Aussie economy will still bounce back more quickly than others.
Tomorrow will see an update for UK GDP in November and although it is a flash estimate it will help analysts to gauge whether their assessments on the ONS figures are on track.
UK Vaccination Push Could Help Keep Pace
The UK government is driving ahead with the delivery of virus vaccinations and this could help the pound to keep pace with the Australian dollar.
The UK has a reported 21 million vaccines in the country with around 3 million already given out. The government opened seven vaccination centres last week and Prime Minister Boris Johnson has talked of allowing 24/7 access to vaccines once the supply allows. Johnson’s government has set a target of injecting 15 million residents by February 15th, with the over-70s and front-line workers being offered the jab first.
Australia has been boosted by news that the country had recorded zero local cases of coronavirus across the country in the last 24 hours. There are currently less than 300 active cases in Australia with the majority of infected stuck in hotel quarantine.
The AUD to GBP outlook is going to be driven by the ability of the UK economy to catch up with the Aussie economy’s rebound. The recent threats of a lockdown haven’t helped the Aussie dollar, but the lack of cases will see their economy inch ahead in the months ahead. The UK is on a good path to reopen with vaccines, but this is at risk from supply chain issues and higher case numbers, while the harsh lockdowns are also going to dent the UK outlook.
AUDGBP will look to make a move in the next week or two, with traders deciding on whether the Aussie can break above the 2020 highs, or whether the pound sterling can mount a comeback.
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