The AUD to GBP exchange rate was higher on Monday with the exchange rate testing the 0.5600 level again. The Australian economy will see the release of the latest consumer confidence figures early on Wednesday with markets expecting a reading of 107.
AUDGBP has bounced from recent lows at 0.5550 and is looking to repair the damage from the recent pound rally.
Victoria Sees Two New Virus Cases
Victoria Health Officer Brett Sutton has said that “everything” is under review, after the troubled stated saw two new virus cases linked to a quarantine hotel.
Australian is seeing low evidence of cases in other states with New South Wales and Western Australia contained, but Victoria was the most heavy-handed when it comes to lockdowns. The latest cases were based on travelers in a designated quarantine hotel, but if a staff member tests positive then another lockdown could be on the cards and that would hit the AUD to GBP outlook.
Australia also saw issues with its vaccines after South Africa blocked the AstraZeneca vaccine due to concerns about its effectiveness. Australia’s health officials ordered only one vaccine and it was the one at the centre of the debate. That could turn out to be an error on the part of officials if Australia is left with no vaccine campaign and the Aussie dollar still has some underlying risk despite the lack of recent cases.
Consumer Confidence is High but Expected
Tomorrow sees the release of Westpac Consumer Confidence figures and the market is expecting a reading of 107. The indicator saw lows near the 75 number in April but has steadily increased to a high of 112 in December. The index is created by 1,200 Aussie households on their evaluation of current and future economic conditions.
The Australian consumer is buoyant because they are currently seeing less stringent lockdown measures than the likes of the UK. The domestic economy is almost operating as normal and Western Australia’s recent lockdown lasted around six days.
Markets are focusing more on the bigger picture and last week saw the RBA doubling their current stimulus measures to A$200bn. This is a sign of underlying weakness in the economy despite being close to normal operations and the unemployment is stuck at 6.6% and is being propped up by the wage subsidy scheme which is about to end.
The AUD to GBP rate still has a large premium from the pre-Brexit referendum days, where the pair saw a low of 0.4475 in August 2015. Once the UK economy is back open it could look to regain some of that lost ground if the country’s economic performance beats expectations.
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