The AUD to GBP exchange rate was lower by 0.39% on Wednesday as South Australia lifted its border restriction with Melbourne. The country has now extended its virus-free run and traders are happy to place further bets on the Aussie economy.
AUDGBP trades at 0.5583 with no major economic data releases until next week’s UK budget and Australian interest rates.
South Australia Ends ‘Border Wars’
South Australia has lifted its border restrictions with Victoria after NSW Premier urged the ending of “border wars” that risked seeing the country held back. Border restrictions will be lifted from Friday and the state’s Premier Steven Marshall also seemed oddly proud that dancing would soon be allowed.
Venues with capacities of 200 and 1000 will be allowed to open, but they have to limit numbers on the dancefloor to 50 at a time.
Marshall said: “A lot of people are going to be quite relieved that dancing is going to be allowed in South Australia”.
Traders are boosting the price of the Aussie dollar as the country’s vaccine program rolls out this week. The country is coming out of its summer season and will be on a path to have its vulnerable age groups protected before the arrival of winter. Australia hasn’t seen long lockdowns in the same manner as the UK and the economy should be operating at normal levels soon.
The pound is being boosted in global markets after Boris Johnson set a path for the economy to exit lockdowns in a staged strategy which will see the country fully reopened around June.
The AUD to GBP outlook will now move back to economic data for the price action but next week’s UK budget and RBA interest rate decision will come first.
RBA Should Hold Steady While Sunak Stimulates
Next Wednesday will see the UK Chancellor Rishi Sunak releasing his second budget. After the Bank of England held off on further stimulus measures in its last interest rate meeting, the baton has been passed to Sunak to stimulate the economy.
The Australian central bank is also likely to hold off on further stimulus after doubling their bond buying package last month. A further boost from the RBA would raise alarm bells and the bank should also hold interest rates at 0.1%.
With the UK given a template for reopening, the Chancellor will have the opportunity to drive the path forward with support measures. Sunak has been under pressure from business groups in various sectors to provide further support, while some analysts have urged him to spend big. Spending big is a certainty, but many will be watching his actions on taxes.
The AUDGBP has support at 0.5500 but the pair may not move too far until the events of next week.
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