The AUDGBP exchange rate was higher by 0.15% as the Aussie tries to regain some ground. The pound has strengthened around its reopening plans, but the Australian economy has also been positive and may find buyers.
AUDGBP is trading at the 0.5540 price level after moving to 0.5520 last week.
Aussie Consumers Upbeat for Year Ahead
Australian consumers are seeing a positive start to the year as the weekly ANZ-Roy Morgan consumer confidence index was 1.5% higher, with four out of its five sub-indices showing strong gains.
ANZ bank economists put the rise down to the December national accounts, which showed the economy had scored two of growth above 3% for the first time. The market will get another dose of consumer behaviour tomorrow with the Westpac Consumer Confidence index and that could spur further gains in the Aussie dollar in coming sessions.
Australia is moving the workforce off of the wage subsidy program and will be interesting to see how that plays out in coming months. The scheme will be replaced instead by targeted moves, with the first being an expansion of the support for apprentice wages.
The reason for the recent underperformance in the Aussie dollar has been the rise in government bond yields. Traders worry that it could spell the end for bullish commodities and stock markets.
Schools Reopening in the UK as Virus Cases Lower
Schools across England have now reopened as part of the first of four reopening stages set out by the Prime Minister.
During a press conference on BBC News, Boris Johnson highlighted that the risk of increased transmission was inevitable as schools go back, however, he was hopeful that it will mark a “cautious but irreversible” step out of the latest lockdown.
At the end of each stage the government will decide after looking at the data on cases, deaths and hospitalizations, whether to continue reopening. This shouldn’t be a problem with the vulnerable age groups being fully vaccinated.
The Bank of England’s Governor Andrew Bailey was optimistic about the outlook for the British economy but signalled that there was some risk or rising inflation. The Governor suggested that the bank would allow inflation to get to their target and “hold it there,” which may be why there has been a lack of action from the Federal Reserve or ECB after the latest bond activity.
The pound has been gaining on the outlook for the reopening, but if they hit a roadblock then the Aussie dollar could take advantage. Australia is on track to roll out their vaccinations by October, while the economy has been less affected with light lockdowns. The only risk is that Australia is now heading for their winter season and may see cases build before October.
The AUDGBP rate has support at the 0.5500 level but may be looking to mount a rebound. The consumer confidence numbers tomorrow will maybe decide which way it goes. You can get in touch using the form below to discuss these factors in further detail ahead of your currency exchange.