The AUD to GBP exchange rate was 0.42% higher in early week trading as traders gear up for an important two days. Tuesday will see the latest interest rate decision from the Reserve Bank of Australia, while Wednesday will bring the release of the latest UK government budget.
AUDGBP is trading at the 0.5552 level as both countries see improvements in virus case levels.
Aussie Yields Warn of Bond Market Trouble
Tomorrow will see the latest interest rate decision from the Reserve Bank of Australia and this comes after markets were sweating over rising yields last week. Expectations of higher inflation saw the RBA buying its highest amount of bonds in the market since the panic of March 2020. The situation has cooled and the world’s central banks will have the power to squeeze rates lower again, but the cat is out of the bag for inflation. The markets are now looking at the potential for banks having to increase their key rates ahead of the planned 2023-24 time period and the RBA’s comments will be watched closely.
Rishi Sunak’s second budget as UK Chancellor will also be important for the Aussie dollar and British pound rate. The country is moving towards a reopening of its economy and the Chancellor has a chance to kick-start the country’s growth prospects. A planned raid on corporate tax and pensions has some investors fearing that he may go too far and the UK could come under pressure if they are seen to be losing the benefits of the early vaccine rollout that boosted sterling this year.
UK Talks of Single Shot Vaccine as Cases Fall
A single-shot vaccine to combat coronavirus could be released in the next few weeks, with regulators starting the approval process this week. Johnson & Johnson’s vaccine is seeking approval as the UK reported the lowest amount of virus cases in almost five months.
Figures are dropping as the country’s vaccination rollout moves into the second dose stage and this will boost the chances of the economy reopening according to Boris Johnson’s plan for a full restart in June.
In Australia, the State of Victoria has recorded no new virus cases for the third day in a row after almost 7,000 tests. The news comes as up to three-quarters of employees will be returning to the workplace on Monday in Melbourne’s Central Business District. Australia’s vaccine rollout is finally underway and this will keep the Aussie dollar supported after it lost ground to the pound sterling in January and early-February.
The AUDGBP has support at 0.5500 if the pound can gain ground with the budget. Resistance for Aussie gains is further away at the 0.5720 level.