The AUD to GBP exchange rate was 0.11% lower on Tuesday as Australia saw the arrival of its Pfizer vaccines. The country started its vaccination program on Monday, but the low case count will see this moving at a fairly slow pace. Traders have priced in the potential for a second quarter reopening into the pair and UK Prime Minister Boris Johnson’s cautious approach has made traders hesitant about making any further bets on sterling in the near-term.
AUDGBP traded at a high of 0.5633 this morning but is now pulling back to 0.5615.
Australia Urged to End Border Wars
The Australian state of New South Wales will urge the national cabinet to end the recent border wars, warning that the country risks being left behind by the snap lockdowns. Premier Gladys Berejiklian has asked the government to start planning for a reopening of international borders by October, when the majority of Australians are due to be vaccinated.
The outlook is in contrast to the UK, where the country is set to allow international travel in May, following the Prime Minister’s strategy released yesterday. Australia has seen its travel and tourism sectors struggle and the ongoing restrictions will continue to hurt as the country moves out of its summer season.
Berejiklian said: “We need to start thinking about the future because we run the risk of being left behind … the rest of the world is opening up.”
Australia has now gone six days without any cases of the virus, while a second batch of the Pfizer vaccine arrived in Sydney this morning.
The AUD to GBP outlook will now swing between the UK’s reopening and the case outlook in Australia. Even if Aussie borders are relaxed, holidaymakers that have been locked down will want to escape to sunnier climates and no real change can be expected in tourism until the next spring/summer season.
Another Dismal Jobs Number Weighs on Sterling
Unemployment figures from the ONS this morning have seen the UK jobless rate rising to 5.1% in the last three months of 2020. The release marks the highest level since 2016 and spin doctors were quick to say that the numbers are lower than the financial crisis, but there was no furlough scheme back then.
The Australian economy has seen its own issues with employment and both countries are masking this with huge stimulus measures and government spending. The UK’s move to open its economy more quickly should see further pound strength in the coming months.
Boris Johnson’s roadmap to reopening was more cautious than some had hoped, with the UK expected to resume foreign travel around May, while the economy should be fully open in June.
The AUDGBP has been trading in a 100 pip range since late-January as traders are undecided about making further bets on the UK recovery.
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