The AUDGBP exchange rate was moving higher again after US inflation cooled investor fears and saw risk assets surging. Gold is seeing a third day of gains, while other mining staples such as copper are also higher and boosting the Aussie dollar.
AUDGBP is trading at the 0.5578 as the pair seeks to get back over the 0.5600 level which has been the key level since the end of January.
US Prices Boost Aussie Outlook and Cool Fears
The Australian dollar was boosted after US inflation figures came in as expected. Recent selling in the bond markets had rocked the Aussie as investors feared an earlier tightening to interest rates.
The low-rate environment also boosts the outlook for commodities and the Australian mining sector. Despite this, the ASX 200 index of shares didn’t jump with the US market as traders are starting to move into value stocks with tech and mining names being left behind after a strong recovery over the last year.
US inflation figures have cooled market fears, but the country is about to unleash a $1.9 trillion wave of stimulus money into the economy, and it is unlikely that the inflation situation will go away. Economies are also set to reopen after being shut down for months and this will put further pressure on prices.
Markets are cheered in the meantime and the Aussie dollar could start to rebound against the pound as Boris Johnson’s cabinet drag their heels over reopening, with ministers looking for clarity on foreign holidays.
Australia Set to Subsidise Air Fares in Tourism Drive
The Australian government has unveiled an A$1.2 billion tourism support package on Thursday with the goal of stimulating local travel in the country with international routes still closed.
Airline ticket subsidies for travellers, cheap finance for small tour companies and financial aid for country’s airlines are featured in the new program in an effort to boost the beleaguered sector.
Aussie PM Scott Morrison said: “This package will take more tourists to our hotels and cafes, taking tours and exploring our backyard”.
Tourism is a big driver for the Aussie economy, with 5% of the country’s workforce and $60 billion added to GDP in the year prior to the virus.
The support package gifts $200 million Qantas and Virgin Australia over the next six months in order to help maintain mothballed airlines and pay staff. Qantas lost $11 billion in revenue last year and are still set to cut 8,500 jobs. Qantas hopes to resume international flights by the end of October, which is the date that the government have set out for completion of their vaccine program.
The AUD to GBP rate will now head for 0.5600 with a UK economic update due tomorrow. Get in touch ahead of this announcement and discuss how your upcoming currency exchange is likely to be impacted.