AUD to GBP Unmoved by Lockdown and UK GDP

AUD GBP Lower as Traders Await RBA Meeting

The AUD to GBP exchange rate was flat on Friday despite the State of Victoria enforcing a five-day lockdown and UK GDP coming in higher than expected.

AUDGBP is trading at 0.5615 as the Aussie continues to hold the 0.5600 support against sterling.

Melbourne Back in Lockdown

The State of Victoria has moved to another lockdown which was bound to happen after their one virus case expanded to eleven positive tests. The state has been one of the most aggressive on virus actions and the latest move will see the temporary closure of schools and a ban on gatherings at homes or churches, while masks will be required everywhere. Despite the apparent seriousness, the Melbourne Open tennis will continue, but fans will not be allowed to attend.

The outbreak was blamed on a positive test at an Australian quarantine hotel and the premier of Victoria said that the move was intended to be a “short, sharp circuit breaker” to prevent a repeat of last year’s extended shutdown in Melbourne.

The Australian dollar hasn’t reacted to the news and despite the signing of a deal with Europe to gain further vaccine doses, the country’s programme will not rollout until later in the year, which will leave the dollar vulnerable.

The latest lockdown will be another weight on Australian spending after final retail trade figures this week showed a tough year. Despite some monthly surges, the retail turnover in 2020 was still 15% below the levels recorded in 2019. Spending on clothing and personal accessories was also lower by 8.5% in 2020 compared to 2019, which was the worst annual drop ever.

UK Beats Q4 Growth Prediction in ‘Worst Annual Fall’

The British economy saw quarterly growth of 1% in the final quarter of 2020 according to estimates. Analysts had predicted a gain of 0.5% as the country moved towards the Christmas lockdowns.

The December month-on-month was also better than economists had forecast, with a gain of 1.2% compared to expectations for 1%.

Despite the improvement into year-end, the economy still logged “the largest annual fall in UK GDP on record,” in 2021. The country still remains 6.3% below its pre-virus economic peak.

The numbers for the UK highlighted the importance of the Service sector again as output grew 1.7%, while it was 0.3% in manufacturing. This was despite the struggles for retail outlets, which were locked down in November before a brief reopening.

The AUD to GBP rate is looking to rebound from sterling strength this year, but the UK has a head start on vaccines and could see a smoother exit from the virus. If you’ve got an upcoming currency exchange involving Australian dollars, you can get in touch using the form below to discuss these factors in further detail.